TOKYO—The Bank of Japan on Wednesday maintained ultra-low interest rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus program amid mounting inflationary pressure.
The surprise decision sent the yen skidding against other currencies and bond yields tumbling the most in decades, as investors unwound bets they made anticipating the central bank would overhaul its yield control policy.
Instead of changing its stimulus program, the BOJ crafted a new weapon to prevent long-term rates from rising too much—a move some analysts took as a sign Governor Haruhiko Kuroda will hold off on making big policy shifts during the remaining months of his term, which ends in April….