Bank of Japan to Cut Monthly JGB Purchases Quarterly Through January–March 2027

The Bank of Japan (BOJ) said its Policy Board discussed developments and functioning in Japan’s government bond market at a monetary policy meeting held today and reviewed guidelines for future bond purchases. According to Odaily, the BOJ said long-term interest rates should, in principle, be formed by financial markets, and that predictable bond buying is appropriate while maintaining sufficient flexibility to support bond market stability. Based on this approach, the BOJ decided by a 7-1 vote to reduce its planned monthly purchases of Japanese government bonds (JGBs) by about 200 billion yen each calendar quarter from now through January–March 2027. From April 2027, the BOJ said its monthly JGB purchase amount will be maintained at about 2 trillion yen. The BOJ said that if long-term interest rates rise rapidly, it will respond flexibly, including by increasing JGB purchases, conducting fixed-rate JGB purchase operations—both of which can be carried out outside the monthly purchase plan—and conducting funds-supplying operations against pooled collateral. The BOJ also said it will not conduct a mid-term evaluation of its direct JGB purchase plan going forward. However, it said it may adjust the pace of JGB purchases at monetary policy meetings when deemed necessary, based on its basic approach to purchases, JGB market developments, and other factors.