The central bank of Japan’s board, led by Governor Kazuo Ueda, maintained the benchmark interest rate at 0.5% following a two-day meeting, according to a statement released today.
The central bank also indicated plans to slow down the pace of its monthly government bond purchase reductions from the next fiscal year, switching to quarterly reductions of 200 billion yen (€1.15 billion) from the current 400 billion yen, the bank announced.
This would decrease monthly purchase volumes to about 2 trillion yen (€11.76 billion) generally in the first quarter of 2027, approximately the same amount the bank purchased to ensure market liquidity before launching a massive monetary easing program in 2013.
The board’s cautious approach was anticipated by most central bank observers, following recent volatility in Japanese bonds that had spread to global debt markets.
After more than a decade as the largest buyer of government bonds, the central bank must carefully calibrate its market exit to avoid spooking investors in the process.
All 53 economists surveyed by Bloomberg News expected the rates to remain unchanged at the meeting, while two-thirds expected the BOJ to slow down its reduction in bond purchases.
