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TOKYO, March 31 (Reuters) – The Bank of Japan plans to reduce the total amount and frequency of its bond purchases in April from March, the central bank said on Wednesday, following its decision earlier this month to widen the target range of the 10-year government bond yield.
The BOJ will buy short- to long-dated bonds four times next month, compared with five times in March, and will buy super-long bonds only once, compared with twice in March, it said.
As a result, the BOJ’s buying of conventional JGBs is expected to fall by about 9% to 5.9 trillion yen ($53.33 billion) in April, compared to 6.45 trillion yen in March.
JGB futures price fell about 15 ticks to 151.00 in after-hour trading as the reduction was bigger than expected.
“It was a bit of surprise that the BOJ cut its buying in five- to ten-year bonds quite a bit, the maturity in which markets weren’t expecting the BOJ to reduce buying,” said Ryosuke Matsuzaki, market analyst at Mizuho Securities.
The BOJ said it will buy 450 billion yen of those maturities four times, which will add up to monthly total of 1.8 trillion yen.
Until March, they were the tenors the BOJ used to buy the most, with the BOJ buying 420 billion yen of them five times a month
In April, JGBs with one to three years to maturity will become the biggest target of the BOJ’s buying.
The Bank of Japan slightly loosened its grip on long-term interest rates in mid-March and laid the groundwork to taper its huge asset purchases, as part of steps to make its stimulus sustainable enough to weather a prolonged battle to fire up inflation, which has languished well below its 2% target. ($1 = 110.63 yen) (Reporting by Tokyo Markets Team; Editing by Andrew Heavens and Kim Coghill)
