Bank of Japan to trim bond buying, keeps rates steady
TOKYO -The Bank of Japan kept ultra-low interest rates on Friday but decided to start trimming its huge bond purchases in a slow but steady retreat from its massive monetary stimulus.
"We also decided to reduce our purchase amount thereafter to ensure that long-term interest rates would be formed more freely in financial markets," it said. Markets are focusing on how Governor Kazuo Ueda, at his post-meeting briefing at 0630 GMT, reconciles recent weak signs in the economy with the bank's current projection that Japan will make steady progress towards achieving its price target.
The central bank is also under pressure to embark on quantitative tightening and scale back its $5 trillion balance sheet to ensure the effects of future rate hikes smoothly feed into the economy. The Federal Reserve held interest rates steady on Wednesday and signalled the chance of a single cut this year. The European Central Bank cut interest rates last week for the first time since 2019.
Japan's battered currency has become a headache for policymakers by inflating import prices, which in turn boosts living costs and hurts consumption.
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