The Bank of Japan made a further tweak to its yield cap program at its policy-setting meeting on Tuesday, loosening its grip on long-term yields that have been trending upward.
The Policy Board decided to set the upper limit for 10-year bond yields at 1.0 percent, three months after deciding to cap them at that threshold amid stickier-than-expected inflation and a weak yen.
The decision came as the BOJ upgraded its inflation outlook to 2.8 percent in both fiscal 2023 and 2024, meaning it would remain above the central bank's target of 2 percent for three straight fiscal years.
Under its yield curve control program, short-term rates are set at minus 0.1 percent while 10-year yields are guided to around zero percent.
