BoJ hikes short-term interest rates by 25bps to 1.00%, as expected, while it pauses tapering of bond buys in which it will keep monthly pace of JGB buying at around JPY 2tln from April 2027

Says:

• Decision made by 7-1 vote as board member Asada dissented against a hike, while board member Tamura proposed tapering bond purchases by JPY 200bln per quarter from April 2027 onward, but the proposal was rejected by majority vote.
• Will continue to raise the policy rate in response to developments in economic activity, prices and financial conditions.
• Will examine the likelihood of realising baseline scenario as well as risks in considering the timing and pace of policy adjustment.
• No change in the current plan to reduce monthly JGB buying by JPY 200bln yen each quarter until January-March 2027.
• Is prepared to amend the bond-taper plan at future policy meetings if necessary.
• Will discontinue the practice of conducting an interim assessment of the bond-taper plan.
• Will respond nimbly, including by increasing JGB buying and conducting fixed-rate purchase operations, in the event of a rapid rise in long-term rates.
• Attention is needed on the impact of the future course of the Middle East situation on financial markets, FX markets, the economy and prices.
• Must pay attention to the effects of global AI-related demand and future FX moves on Japan’s economy and prices.
• Risk of a significant economic slowdown appears to have decreased compared with a while ago.

Planned Monthly Bond Purchases

• Plans to buy JPY 75bln of JGBs with more than 25 years of maturity twice a month in July-Sept, unchanged from previously.
• Plans to buy JPY 100bln of 10-25 year JGBs twice a month in July-Sept (Prev. JPY 80bln, three times).
• Plans to buy JPY 335bln of 5-10 year JGBs twice a month in July-Sept (Prev. JPY 240bln, three times).
• Plans to buy JPY 320bln of 3-5 year JGBs twice a month in July-Sept (Prev. JPY 230bln, three times).
• Plans to buy JPY 355bln of 1-3 year JGBs twice a month in July-Sept (Prev. JPY 255bln, three times).