Gold prices just lower; monthly gains on track
Investing.com-- The Bank of Japan left interest rates unchanged as widely expected on Tuesday, and stated that it will reduce the pace at which it is tapering its monthly bond purchases from the next fiscal year.
The BOJ left its benchmark policy rate at 0.5% for a third consecutive meeting after a 25 basis point hike in January.
The central bank said it had decided on a plan to slow the pace at which it is cutting its bond purchases from next year. Starting from April 2026, the BOJ will cut its bond purchases by about 200 billion yen per quarter, compared to its current pace of 400 billion yen per quarter.
The move is likely aimed at reducing market disruptions while also maintaining sufficient support for the Japanese economy, which is grappling with increased headwinds from steep U.S. trade tariffs.
The BOJ said that it will conduct an interim assessment of the plan to reduce its bond purchasing in June 2026.
“Japan’s economy has recovered moderately, although some weakness has been seen in part,” the BOJ said in a statement, adding that Japanese economic growth was likely to moderate amid trade headwinds and weakness in other major economies.
The central bank had in its previous meeting slashed its expectations for gross domestic product growth in the current year, while also forecasting mildly softer inflation.
While the BOJ’s plans to reduce its bond tapering activities present more near-term support for the Japanese economy, the central bank is still set to slash its bond buying in the coming years– an extension of its 2024 plans to begin steadily unwinding years of ultra-loose monetary policy.
Focus is now on an upcoming address by BOJ Governor Kazuo Ueda for more cues on the economy and monetary policy. Ueda warned last week that the BOJ will keep raising interest rates if inflation remains sticky.
The central bank has raised interest rates thrice over the past year, fishing them out of negative territory.