Critics have derided Bank of Japan governor Haruhiko Kuroda as a lame duck since 2016. With just months to go before his term ends in April, he has tried to prove them wrong. But the BoJ’s surprise decision to widen its bond yield target band will not be enough to lift the economy out of its slump.  

The bank shocked markets by unexpectedly heightening guide rails, allowing long-term interest rates to rise. The 10-year bond yield can edge up to around 0.5 per cent from a previous upper limit of 0.25 per cent. Bond prices dropped, the yen strengthened and the benchmark Nikkei fell 2.5 per cent.

The beneficiaries are Japanese banks and insurers. The steeper upper limit means higher interest income and profits for banks such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group. These have long suffered from negative rates.