BOJ Policymakers Suggested Reducing JGB Purchases at April Meeting

Jiji Press

17:29 JST, May 9, 2024

Tokyo (Jiji Press)—Many Bank of Japan policymakers at the central bank’s April 25-26 policy-setting meeting suggested reducing its purchases of Japanese government bonds, with one calling such a move “one option” to restore market functions, a summary of the meeting showed Wednesday.

“One option is to reduce the Bank’s monthly purchase amount of JGBs,” a BOJ Policy Board member said, while another member noted, “It is important for the Bank to proceed with reducing its purchase amount of JGBs in a timely manner.”

The April meeting came after the BOJ decided in March to end its negative interest rate policy and other easing measures while maintaining its monthly JGB purchases at around ¥6 trillion .

In a policy statement issued after the April meeting, the BOJ did not mention the monthly purchase amount.

Regarding the yen’s recent depreciation, meanwhile, a policymaker said at the April meeting, “If underlying inflation continues to deviate upward from the baseline scenario against the backdrop of a weaker yen, it is quite possible that the pace of monetary policy normalization will increase.”

Several policymakers indicated that the central bank should make further tweaks to its monetary policy.

“It will be necessary for the Bank to raise the policy interest rate in a timely and appropriate manner as the likelihood of realizing the outlook for economic activity and prices rises,” one policymaker said.

Another policymaker suggested, “One option is to adjust the degree of monetary accommodation by conducting moderate policy interest rate hikes, in response to developments in economic activity and prices as well as financial conditions.”