MNI BRIEF: BOJ keeps Rate at 0.5%; JGB Taper to JPY200 Bln

The Bank of Japan Board on Tuesday unanimously decided to keep its unsecured overnight call rate at 0.50%, while announcing a slower pace of JGB purchase reductions to JPY200 billion per quarter from the current JPY400 billion.

The BOJ said it will begin reducing JGB purchases at the slower pace from April 2026 through March 2027, with the program to be reviewed again in June 2026.

The Bank also projected that its long-term JGB purchases in Q1 2027 will total about JPY2.1 trillion, down from JPY2.9 trillion in Q1 2026.

“In case of a rapid rise in long-term interest rates, [the Bank] will make nimble responses by, for example, increasing the amount of JGB purchases and conducting fixed-rate purchase operations of JGBs – both of which can be done regardless of the monthly schedule of JGB purchases – and the Fund-Supplying Operations against Pooled Collateral,” the BOJ said in a statement.

The Board's decisions were largely anticipated. (See MNI BOJ WATCH: Board To Discuss JGB Taper, Hold Policy)