The Bank of Japan announced further adjustments to its yield curve control (YCC) policy on Tuesday, allowing 10-year Japanese government bond (JGB) yields to increase above 1% in a move that follows the weakening of the yen over the last year and a half.

The development is significant, as the central bank has long maintained its YCC policy — a strategy of buying up government bonds to control interest rates. Since July, the long-term interest rate has been capped at 1%, an increase over the previous ceiling of 0.5%. The move is in response to inflationary pressures and volatility concerns.

Amid economic uncertainties at home and abroad, BOJ Gov. Kazuo Ueda said having greater flexibility within the YCC policy would help curb side effects in financial markets in the future.