Bank of Japan decides to suspend reduction of bond purchases from next July

Odaily Planet Daily News: The Bank of Japan stated that at today's monetary policy meeting, the BOJ Policy Board reviewed the developments and operational conditions in the Japanese government bond (JGB) market and discussed the future policy regarding bond purchases. In principle, long-term interest rates should be formed by financial markets; therefore, it is appropriate for the central bank to conduct JGB purchases in a predictable manner while maintaining sufficient flexibility to support the stability of the bond market.

Based on this approach, and with the aim of improving the efficiency and stability of the JGB market, the board decided by a majority vote of 7 to 1 to implement the following measures: From now until the January-March quarter of 2027, the central bank will, in principle, reduce its monthly JGB purchase plan by approximately 200 billion yen per calendar quarter. Starting from April 2027, its monthly JGB purchase amount will be maintained at around 2 trillion yen. In the event of a rapid rise in long-term interest rates, the BOJ will respond flexibly, such as by increasing the scale of JGB purchases, conducting fixed-rate JGB purchase operations (these two operations are not subject to the limits of the monthly JGB purchase plan), and carrying out funds-supplying operations against pooled collateral.

Furthermore, the Bank of Japan will not conduct a mid-term review of the direct JGB purchase plan going forward. However, it is prepared to adjust the pace of JGB purchases as deemed necessary at monetary policy meetings, based on the basic guidelines for JGB purchases and other factors, including developments in the JGB market. (Jinshi)