Analysts expect the Bank of Japan to adjust its bond purchase reductions at the June meeting to manage rising yields and balance sheet risks.
The Bank of Japan is considering slowing or pausing its bond purchase tapering at the June 15-16 policy meeting, as rising yields and market volatility complicate its normalization plans. No final decision has been made on the pace of reductions for fiscal 2027, with options ranging from a full pause to a modest slowdown to 100 billion yen per quarter.
The BOJ currently reduces purchases by 200 billion yen per quarter, maintaining a monthly pace of around 2 trillion yen. With nearly 49% of outstanding Japanese government bonds held by the central bank, investor meetings this week will influence the decision. Analysts are divided, with some favoring a full pause due to instability, while others expect a slower reduction.
The BOJ may also raise short-term interest rates at the same meeting, prompting a softer taper stance to avoid dual tightening. Sources indicate no immediate need for emergency bond-buying operations despite recent yield moves.