Japanese Central Bank to Review Bond-Buying Program Next Month as Institutions Disagree on Future Scale

Deep News05-21 15:51

On May 21, the Bank of Japan released a new survey report indicating significant divergence among market participants regarding the future path of bond purchases, as the central bank prepares to review its bond-buying reduction plan next month. Some financial institutions are urging the Bank of Japan to halt the reduction of bond purchases starting from the next fiscal year and maintain the current pace of buying. It is reported that the Bank of Japan has been gradually scaling back its large-scale bond purchases since 2024, currently maintaining a monthly purchase level of about 2.1 trillion yen in Japanese government bonds. Regarding the future direction of monetary policy, the survey report notes that some financial institutions believe maintaining a monthly purchase scale of 2.1 trillion yen is unlikely to cause market function distortions, a stance also supported by other industry peers. However, another group of institutions emphasizes that the Bank of Japan should continue to slow down the pace of bond purchases. Some suggest that the central bank should eventually further reduce monthly bond purchases to about 1.3 trillion yen or even cease buying altogether.

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