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The yield on 10-year Japanese government bonds fell sharply on Wednesday after the Bank of Japan kept its ultraloose monetary policy unchanged.

The Bank of Japan in a two-day monetary policy meeting decided to keep its target band for 10-year Japanese government bonds at between plus and minus 0.5%, bucking speculation by some market participants that the central bank would move to tighten its monetary policy.

BOJ Gov. Haruhiko Kuroda told reporters at a news conference that the central bank will continue its loose monetary policy, saying, “We do not think we need to further widen the target band of the long-term bond yields.”

The yield on the 10-year bond slid to 0.36% at one point in the afternoon, after topping the 0.5% ceiling before the BOJ meeting, as investors bought back bonds after the announcement.

The yen fell to around 131.50 per dollar from around 128.50 before the meeting.

With the policy unchanged, the BOJ‘s decision led to a sell-off of the yen and buying of the dollar, as investors saw the gap between Japanese and U.S. interest rates would continue to widen.

The Nikkei Stock Average finished up 2.5% on the day, marking a year-to-date high closing price of 26,791.12, with stocks that benefit from a weak yen, such as Toyota Motor, gaining.

Referring to economic uncertainties — including recovery from the COVID-19 pandemic and the unsettled global economy — Kuroda stressed that it is important to firmly support the economy and create an environment in which companies can raise wages. “The Bank of Japan will continue monetary easing and aim for the sustained and stable realization of its price stability target in a manner that is accompanied by wage hikes.”