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yesterday

BoJ Slows Bond Taper, Holds Interest Rate at 0.5%

It is designed to steady surging long-term yields by moderating the taper pace in response to persistent inflation pressure.

Japanese national flag hoisted atop of the Bank of Japan headquarters is seen through trees in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
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Overview

  • The BOJ held its benchmark rate at 0.5% on June 17, aligning with economists’ expectations.
  • It will reduce its JGB purchases by 400 billion yen per quarter through March 2026 before slowing taper steps to 200 billion yen per quarter from April 2026 to March 2027.
  • This slower tapering is intended to support market stability after 40-year yields hit a record 3.675%.
  • Inflation has remained above the BOJ’s 2% target for more than three years even as economic growth prospects have weakened.
  • The finance ministry plans to cut issuance of long-dated JGBs and is considering buybacks of super-long bonds to rein in borrowing costs.