BoJ holds rates, says it will slow bond purchase taper
TOKYO
The Bank of Japan (BoJ) kept interest rates unchanged on Tuesday and said it would taper its purchase of government bonds at a slower pace amid concerns about the effect of trade uncertainty on the world's number four economy.
The central bank spent years buying up Japanese Government Bonds (JGBs) to keep yields low as part of an ultra-loose monetary policy aimed at banishing stagnation and harmful deflation.
But it began moving away from that program last year as inflation began to pick up and the yen weakened, and hiked interest rates for the first time since 2007 and began winding down its JGB purchases.
It has since then lifted borrowing costs several times to 0.5 percent, their highest level in 17 years, and continued to buy fewer bonds.
However, analysts say uncertainty sparked by U.S. President Donald Trump's trade war has led officials to hold off more hikes, and yesterday they held rates again, while saying they would slow the pace of JGB reductions.
The BoJ also highlighted the risks ahead for the economy, saying "growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors."
However, "factors such as accommodative financial conditions are expected to provide support," it added.
Japan, a key U.S. ally and its biggest investor, is subject to the same 10 percent baseline tariffs imposed on most nations plus steeper levies on cars, steel and aluminium.
Prime Minister Shigeru Ishiba said Monday there had been no breakthrough on a trade deal after talks with Trump on the sidelines of the G7 summit in Canada.
