TechFlow News, June 16: The Bank of Japan (BOJ) stated in its monetary policy meeting today that the Policy Board reviewed developments and operations in the Japanese government bond (JGB) market and discussed future JGB purchase guidelines. In principle, long-term interest rates should be determined by financial markets; therefore, it is appropriate for the BOJ to conduct JGB purchases in a predictable manner while retaining sufficient flexibility to support JGB market stability. Based on this approach, and to improve the efficiency and stability of the JGB market, the BOJ decided—by a vote of 7 to 1—to implement the following measures: Starting now through Q1 2027 (January–March), the BOJ will reduce its monthly JGB purchase target by approximately ¥200 billion per calendar quarter. Beginning in April 2027, its monthly JGB purchase target will remain at approximately ¥2 trillion.
If long-term interest rates rise rapidly, the BOJ will adopt flexible responses—including increasing JGB purchases and conducting fixed-rate JGB purchase operations (both of which are exempt from the monthly JGB purchase target)—as well as providing funds against pooled collateral. Furthermore, the BOJ will no longer conduct mid-term reviews of its direct JGB purchase program. However, the BOJ stands ready to adjust the pace of JGB purchases during monetary policy meetings, as necessary, based on its fundamental approach to JGB purchases and other factors such as JGB market trends. (Jinshi)
