Bank of Japan's Bold Move: Trimming Bond Purchases

The Bank of Japan has decided to keep interest rates unchanged while planning to trim its bond purchases in the future. At a policy meeting, it was agreed to continue current bond-buying practices but propose a plan to reduce purchases in the next one to two years.

The Bank of Japan kept interest rates unchanged on Friday but said it would trim bond buying in the future to allow long-term interest rates to move more. At its two-day policy meeting, the central bank said it would continue to buy government bonds at the current pace. But it decided to come up with a specific plan to trim purchases for the next one to two years, at a subsequent policy-setting meeting in July.

As widely expected, the BOJ maintained its short-term interest rate target in a range of 0-0.1% in a unanimous vote. Governor Kazuo Ueda is expected to hold a news conference to brief on the decision at 3:30 p.m. (0630 GMT).