Sources say the Bank of Japan is considering keeping its current JGB purchase
volume unchanged from the next fiscal year rather than continuing scheduled
reductions. Policy board views are split between members prioritizing market
calm and those pushing steady tapering to shrink the central bank's balance
sheet. At the June meeting the BOJ will review the current taper program
(running through next March) and set policy for FY2027 and beyond. Four people
familiar with the bank's thinking said, given progress in shrinking its balance
sheet and upcoming bond maturities that will lower holdings, internal sentiment
has shifted toward pausing further tapering. The BOJ could abandon its practice
of an annual taper plan and adopt an open-ended framework committing to monthly
purchases of JPY 2.1 tln. Markets expect the BOJ to raise the short-term policy
rate from 0.75% to 1% at next week’s meeting.
