On the surface of it, there is no change to how the yield curve control program is functioning. The target band also remains at +/- 0.50% from zero, so essentially it is supposed to work in the same way as before. However, the Japanese central bank now says that they are affording greater flexibility in conducting its yield curve control. What does that mean?
Well, at least they were kind enough to explain it in simpler terms with the above illustration.
And also take note, how in the depiction they only show that they will be “nimbly” conducting market operations to cap 10-year JGB yields at 1.00% and nothing is said about any floor to the downside. But given the market environment, you can understand why and there is no need to go into that semantics.
In any case, this is a sort of widening of the band but without explicitly doing so. They may well adopt it as an official measure eventually but not without testing the waters in the months ahead and seeing how carried away traders might be in reacting to the change in the JGB market.
If you’re wondering why the Japanese yen is having a major whipsaw on the decision, it is understandable. Some of the headlines might imply no change to policy but the details show that there has definitely been a tweak of sorts as seen above.