The Bank of Japan said on Wednesday it has decided to offer to buy an unlimited amount of 10-year Japanese government bonds (JGB) at 0.25%, in its third move to defend its yield target since February.
The yield on the 10-year Japanese government bond rose to as high as 0.25% in early trade to touch the upper limit of the central bank's yield target.
The rise in yields comes as the yen weakens sharply to two-decade lows against the U.S. dollar, forcing markets to test the central bank's commitment to its super easy yield-curve-control policy.
With the economy still weak and inflation modest compared with Western economies, the BOJ has stressed its resolve to keep monetary policy ultra-loose even as the U.S. Federal Reserve is set to raise rates to stem soaring inflation.
BOJ Governor Haruhiko Kuroda said on Monday the yen's recent moves had been "quite sharp" and could hurt companies' business plans, offering his strongest warning yet of the risks stemming from the currency's depreciation.
Kuroda, however, repeated his view the BOJ must maintain its massive stimulus program to support a fragile economic recovery.