The Bank of Japan (BOJ) kept its short-term interest rate steady at 0.5% on Tuesday, signaling a cautious approach to policy normalization. As expected, the central bank voted unanimously during its two-day meeting to maintain current rates and continue with its existing bond taper plan through March 2026.
However, the BOJ introduced a new, slower-paced reduction strategy for the next fiscal year starting April 2026. It plans to decrease monthly bond purchases by 200 billion yen each quarter, aiming to bring total purchases down to about 2 trillion yen by March 2027.
This move reflects the BOJ’s careful stance as it navigates the shift away from years of ultra-loose monetary policy. Governor Kazuo Ueda is set to address the media at 3:30 p.m. local time (0630 GMT) to provide further insights on the decision.