Japan’s extraordinarily expensive defence of its monetary policy

In december the Bank of Japan (boj) gave speculators an opening. By lifting its cap on ten-year government bond yields from 0.25% to 0.5%, the central bank raised the prospect that it would abandon its “yield-curve-control” policy entirely. Since then, officials have been put to the test by increasingly unco-operative bond markets. The boj has been forced to make enormous bond purchases in an attempt to drive down the yield, buying ¥9.5trn ($72bn) on January 12th and 13th alone.