Bank of Japan to Halve Government Bond Purchase Reductions Starting April Next Year

Local media have reported that the Bank of Japan, Japan's central bank, is considering reducing the scale of its government bond purchase cuts starting from April next year.

Yonhap News

According to the Nihon Keizai Shimbun (Nikkei) and Yomiuri Shimbun on the 15th, the Bank of Japan will discuss the reduction in government bond purchases, which began in August last year, at its monetary policy meeting scheduled for June 16-17.

The Bank of Japan had previously decided to reduce its government bond purchases by 400 billion yen (approximately 3.8 trillion won) per quarter until March next year. After that, it is expected to set the reduction at half the current level, or 200 billion yen (about 1.9 trillion won) per quarter.

According to the current plan, the Bank of Japan, which purchased 5.7 trillion yen (about 54.1 trillion won) in government bonds in July last year, will see its government bond purchases decrease to 2.9 trillion yen (about 27.5 trillion won) in January next year.

If the Bank of Japan reduces the scale of its government bond purchase cuts to 200 billion yen per quarter after April next year, its government bond purchases are expected to reach 2.1 trillion yen (about 2 trillion won) in January 2027.

Regarding the adjustment of the pace of government bond purchase reductions, Nikkei explained, "The Bank of Japan aims to reduce its government bond holdings to allow interest rates to be freely determined in the market, while also seeking to avoid market turmoil caused by a rapid rise in interest rates."

Bank of Japan Governor Kazuo Ueda has been pursuing policy measures such as raising the benchmark interest rate and reducing the scale of government bond purchases since last year, effectively shifting monetary policy to 'quantitative tightening.'

Local media also reported that, at this monetary policy meeting, the Bank of Japan is expected to keep the benchmark interest rate at "around 0.5%" in consideration of global economic uncertainties stemming from the tariff policies of the Donald Trump administration in the United States.