Though the central bank also raised its inflation forecasts, it emphasized the need to keep policy easy as it waits for more signs of sustainable wage and price growth. The BOJ remains in a tough spot, caught between a weakening yen and rising yields that are putting pressure on its stimulus framework.
The Bank of Japan further loosened its grip on government bond yields while remaining the last of its peers to cling to a negative interest rate in a decision that prompted a retreat in the yen.
The BOJ said it will take a more flexible approach to controlling yields on 10-year government debt, saying the 1% level was now a reference point, according to its statement Tuesday. That marks a shift from a previous pledge of daily bond purchases at 1%, a stance that effectively drew a clear line in the sand there.
