BOJ cuts key 5-10 Year bond purchases third time in six weeks

Bank of Japan (BOJ) has reduced purchases of the Japanese government bonds maturing in five to 10 years for the third time in six weeks. 

Key points (Source: Reuters)

• The BOJ has reduced its purchases of JGBS with 5-10 years to maturity to JPY 380 billion from JPY 400 billion previously.
• BOJ has trimmed purchases of JGBs with 25-40 years to maturity to JPY 30 billion from previous JPY 40 billion. 
• The central bank has cut purchases of debt in the 10-25 year zone to JPY 120 billion from JPY 140 billion.  

The decision to trim purchases is a part of routine operations undertaken by the BOJ to keep the 10-year yield around zero percent. The central bank, under the yield curve control framework, reduces the size of the purchases if the downward pressure on the yields strengthens. The BOJ steps up purchases if the yields begin to rise sharply. 

The latest move comes after the official data showed the Japanese inflation growth eased to two-year lows in August. The data will likely put pressure on the BOJ to ramp up an already massive stimulus program.

On Thursday, the central bank kept key policy tools unchanged and expressed readiness to do ease more, if required.