The Bank of Japan announced it would reduce its purchases of government bonds

The Bank of Japan (BOJ) left its policy rate target unchanged at between zero and 0.1 percent on Friday (June 14) after its monetary policy meeting. The central bank also said it would reduce its bond purchases in the future and decide on a specific reduction plan in July.

In a statement Friday, the Bank of Japan said it is continuing its policy of buying long-term government bonds, which it set in March, Xinhua reported. After that, in order to liberalize the formation mechanism of long-term interest rates in the financial market, the central bank will reduce the purchase of government bonds and decide on the specific reduction plan in the next one to two years at the monetary policy meeting in July.

Bank of Japan Governor Kazuo Ueda said at a press conference on the same day, The purchase of government bonds will not be reduced only a little bit, but there will be a corresponding scale.

Ahead of the meeting, the central bank was widely expected to reduce its bond purchases to some extent. However, because the central bank did not launch a specific plan on the same day, the exchange rate of the yen against the dollar fell to about 158 yen per dollar in the Tokyo foreign exchange market after the announcement.

In March, the BOJ raised its policy rate from minus 0.1 per cent to a range of zero to 0.1 per cent, decided to end its yield-curve control policy and pledged to keep monetary conditions loose, including through government bond purchases.