BOJ to reduce bond-buying amounts in Jan-March quarter
THE Bank of Japan on Wednesday (Dec 27) said it would reduce the sums in its regular bond-buying operations in the January-March quarter, as the central bank tries to give more liquidity to the market.
The BOJ slashed the minimum amounts of the range of the offer for bonds between 1 and 10 year maturities while it cut the frequency for longer-dated notes.
The market had expected the reduction. The BOJ has been gradually cutting the amounts in recent operations as yields fell to their multi-month lows to mirror declines in US Treasury yields.
The BOJ has conducted aggressive bond buying operations to defend its ultra-low rate policy, which squeezed liquidity in the Japanese government bonds (JGB) and distorted yield curve.
The curve has corrected as the BOJ in October loosened its grip on a 1 per cent cap on the benchmark 10-year JGB yield , but the bank remains as a dominant owner of JGBs.
The central bank plans to buy between 400 billion yen (S$3.7 billion) and 900 billion yen for 5-year and 10-year JGBs at each offer in the coming quarter, compared with a range of 450 billion yen to 900 billion yen in the Oct to Dec quarter.
Earlier this week, the BOJ offered to buy 475 billion yen of 5 to10 year JGBs, just 25 billion yen above the minimum amount of the range of between 450 billion yen and 900 billion yen.
The BOJ also cut the amounts for buying for other bond terms. REUTERS
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