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		</div><p>The Bank of Japan has broadened caps for government bond yields, a surprise move that pushed bond yields higher globally and hit stocks in Asia.</p>
<p>The central bank on Tuesday said that it would allow the yield curve on the Japanese government bond to range 50 basis points either side of its 0% target, up from the previous cap of 25 basis points.</p>
<p>The Bank of Japan did not mention inflation in its policy statement, but said the shift is intended to “improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions”.</p>
<p>Japan had been a holdout among major industrialised nations in allowing yields to rise. European countries and the US have been raising rates aggressively to combat inflation.</p>
<p>The central bank introduced the previous caps to control its yield curve in September 2016, hoping to lift inflation closer to its 2 per cent target after a long stretch of economic malaise and stagnant inflation.</p>
<p>Because of the slow economic growth, the government has primarily used spending to combat inflation instead of raising interest rates.</p>
<p>Earlier this month, Japan’s parliament approved a hefty 29 trillion yen supplementary budget aimed at countering the blow to household finances from rising food and utility costs and the weaker yen.</p>
<p>In reaction to the announcement bond yields rose globally, but stocks in Asia slid immediately.</p>
<p>Japan’s Nikkei 225 index closed 2.5 per cent lower.</p>
<p>Shares in Europe and the US retreated briefly, but recovered.</p>
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