Bank of Japan reduces scale of government bond purchase cut...benchmark interest rate maintained at 0.5% per annum
Summary
- The Bank of Japan has announced that it will keep the benchmark interest rate unchanged at 0.5% for the third consecutive time.
- The Bank of Japan stated that it will continue reducing government bond purchases, but the reduction scale per quarter will be decreased from 400 billion yen to 200 billion yen.
- The reduction in government bond purchase cuts is explained as a measure to alleviate market shocks.
Benchmark interest rate unchanged for the third consecutive time
Maintained at 0.5% per annum
The Bank of Japan kept the benchmark interest rate unchanged at 0.5% per annum on the 17th, as widely expected by the market.
The Bank of Japan, in its monetary policy meeting held over two days until today, decided to maintain the benchmark rate at its current level. This marks the third consecutive decision to keep rates unchanged. Uncertainties in the global economy caused by U.S. tariff policies are cited as reasons for holding the rate.
The Bank of Japan will continue reducing its government bond purchases, but the reduction amount will be scaled back from 400 billion yen to 200 billion yen per quarter to mitigate market shocks. This adjustment will take effect from April next year.
As recently as last July, the Bank of Japan was purchasing government bonds totaling 5.7 trillion yen, but has since been reducing the amount to normalize the market. If the plan proceeds as scheduled, government bond purchases will decrease to about 2.1 trillion yen per month in the first quarter of 2027.
Il-Kyu Kim, black0419@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
