It will encourage the uncollateralised overnight call rate to remain at around 0.5 per cent, the bank said in a release.
A two-day policy meeting of the central bank concluded today.
It plans to reduce the amount of its monthly outright purchases of JGBs so that it will be about 2 trillion yen in January-March 2027. The amount will be cut down, in principle, by about 400 billion yen each calendar quarter until January-March 2026, and by about 200 billion yen each calendar quarter from April-June 2026.
Since last July, the central bank has been cutting its purchases of JGBs by 400 billion yen ($2.76 billion) each quarter.
The bank decided to reduce its JGB purchases to allow long-term rates to be guided more by the market.
“The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been at around 3.5 per cent recently, as moves to pass on wage increases to selling prices have continued, and as there have been effects of the past rise in import prices and of the rise in food prices, such as rice prices. Inflation expectations have risen moderately,” the release said.
“Japan's economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan's economic growth rate is likely to rise, with overseas economies returning to a moderate growth path,” it added.
ALCHEMPro News Desk (DS)
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