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  • Writer's pictureAdam German

Bank of Japan to eventually reduce bond purchases

Updated: Jun 17

On June 14th, the Nikkei Asia reported the Bank of Japan (BOJ) will reduce its purchases of Japanese government bonds after hearing opinions from market participants and creating a detailed one to two year purchase reduction plan at the next meeting at the end of July.


The BOJ will finalize its reducing strategy in the next meeting. Until then, purchases will continue at around 6 trillion yen ($38.1 billion) per month. 


Bank of Japan Governor Kazuo Ueda

BOJ Governor Kazuo Ueda courtesy of Wikipedia 

 

This move, following the end of the zero-interest rate policy, equity purchases, and yield curve controls on March 19, addresses concerns over the weak yen, which has dropped 27% against the dollar since early 2022. 

 

After a two-day meeting, the BOJ left the policy interest rate unchanged between 0% and 0.1%. 


Recorded a half day prior to the June 14th BOJ announcement 

 

Cutting bond purchases will shrink JGB holdings and signal a shift to quantitative tightening (QT). Previously, the BOJ's quantitative easing (QE) led to it owning 54% of outstanding JGBs, expanding its balance sheet fivefold since 2012. 


Recorded on June 13th.


Market players anticipate the BOJ will raise its policy rate to 0.25% at the July 30-31 meeting. 


Source: 

Nikkei Asia (paywalled but if you open the URL in a private browser window then you can read the full article). 

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