BoJ seen leaving policy rate on hold; may slightly taper reductions in bond purchases in FY26
Key points
- BoJ likely to leave policy rate at 0.5% at June MPM amid highly uncertain outlook
- We do not expect any changes to existing plans for reducing bond purchases and see little need for Bank to alter pace of cuts in FY26
- However, desire to demonstrate commitment to JGB market stability may prompt BoJ to trim quarterly reductions in monthly bond purchases to JPY300 billion starting in FY26
