Holds rates, slows bond taper from 2026 to buy time - next move hinges on inflation
Unexpected tweak to bond tapering: As widely anticipated, the Bank of Japan (BoJ) kept its short-term policy rate unchanged. However, it surprised market by announcing a slower pace of bond tapering from fiscal 2026, citing heightened external risks and ongoing volatility in Japan’s bond market.
Short-term rate (Unanimous vote): The BoJ kept theovernight call rate (OCR) steady at 0.50%.
Long-term rate (8-1 majority vote): The bank halved the planned quarterly reduction in its balance sheet, from JPY400.0b in fiscal 2025 to JPY200.0b in 2026. It expects its holdings to fall to around JPY2.0t by 1Q27.
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