The Bank of Japan is widely expected to keep interest rates steady at the end of its 2-day meeting ending on June 14, 2024.
Kazuhiro Nogi | AFP | Getty Images
The Bank of Japan kept its benchmark interest rate unchanged on Friday but said it was considering reducing its purchases of Japanese government bonds.
As widely expected, the central bank left short-term interest rates unchanged at a range of 0% to 0.1% at the end of its two-day policy meeting.
But it is worth noting that the bank said in a statement that it may reduce its purchases of Japanese government bonds after the next monetary policy meeting scheduled for July 30-31.
The decision was passed by an 8-1 majority vote, with board member Nakamura Toyoaki dissenting.
Toyoaki favors reducing Japanese government bond purchases, but believes the Bank of Japan should decide to reduce purchases only after reassessing economic activity and price developments in the July 2024 outlook report scheduled to be released on July 31.
Ahead of its next meeting, the BOJ said it will gather input from market participants and decide on a detailed plan to reduce purchases over the next one to two years.
Purchasing of Japanese government bonds, commercial paper and corporate bonds will also continue in line with the decision at the March monetary policy meeting.
After the Bank of Japan’s decision, the yen fell 0.52% against the dollar to 157.84, and the yen fell 0.52% against the dollar. 10-Year Japanese Government Bond It fell 44 basis points to 0.924.
benchmark Nikkei 225 Index rose 0.68%, reversing earlier losses, while the Topix gained 0.71%.
bold policy move
But the central bank said at the time that it would continue to Purchase Japanese government bonds at a rate of approximately 6 trillion yen per month ($38.17 billion).
A report released by consulting firm Teneo on June 13 showed that although the large-scale purchase of Japanese government bonds has achieved the effect of stabilizing the 10-year Japanese government bond yield at around 1%, it has also indirectly caused a weakening of the yen. Additional downward pressure.
On May 8, Bank of Japan President Kazuo Ueda said that the central bank will review the recent decline of the yen when guiding monetary policy. Reuters reports.
it came after JPY In late April, the yen fell to a 34-year low of 160 against the dollar, prompting the Bank of Japan to intervene to support the currency.
Ueda told parliament that “a sharp, one-sided fall in the yen is detrimental to the economy and therefore undesirable” because it makes it difficult for companies to formulate business plans.
“If currency fluctuations affect or affect trend inflation, the Bank of Japan must respond through monetary policy,” he added.
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