Bank of Japan keeps rate unchanged

TOKYO, June 18 (Xinhua) -- The Bank of Japan (BOJ) said on Tuesday that it will reduce government bond purchases at a slower pace starting from April 2026 while leaving the short-term policy interest rate unchanged at 0.5 percent.

Since ending its decade-long monetary easing in March 2024, the BOJ has been tapering its monthly bond purchases by 400 billion yen (about 2.77 billion U.S. dollars) each quarter.

From April 2026 onward, the reduction pace will be halved to 200 billion yen per quarter.

While the BOJ is scaling back, it retains the flexibility to increase bond purchases if market interest rates spike. A policy review is scheduled for June 2026 to assess market conditions before deciding on the post-April 2027 bond purchase strategy.

At a press conference following the decision, BOJ Governor Kazuo Ueda emphasized that the move aimed to maintain market stability while reducing bond purchases in a predictable and flexible manner.

He said that while further reductions are desirable to allow interest rates to be freely set by the market, a pace that is too fast could cause unforeseen effects.

Flexible tools, such as fixed-rate purchase operations, will remain in place to respond if interest rates spike unexpectedly, he noted.

Addressing the broader economic environment, Ueda pointed to a high uncertainty surrounding global trade policies and overseas economic and price developments. ■