BOJ Reduces Bond Purchases as Long-Term Yields Rise to 0.940%

May 14, 2024 | News On Japan

TOKYO - The Bank of Japan (BOJ) announced on May 13 that it will reduce the amount of its bond purchases, causing long-term yields to rise to their highest level in six months.

As part of its large-scale monetary easing measures, the BOJ has been purchasing approximately 6 trillion yen in government bonds each month to keep long-term interest rates low. However, on May 13, the BOJ announced a 50 billion yen reduction in the purchase amount for certain bonds.

This marks the first time the BOJ has reduced its bond purchases since ending negative interest rates in March.

Following the announcement, the yield on long-term bonds, a key market indicator, temporarily rose to 0.940%, reaching a six-month high.

The reduction in the BOJ's bond purchases led to a sell-off in the bond market, driving up yields.

Market observers suggest that the BOJ's move to reduce bond purchases may be aimed at addressing the historic depreciation of the yen by narrowing the interest rate gap between Japan and the United States.

Source: TBS

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