Markets prepare for reduction in BOJ’s super-long bond purchases
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The Bank of Japan is expected to make adjustments to its bond-buying plan for the second quarter, potentially including a reduction in the size of purchases of super-long government bonds. This move is part of the bank's quantitative tightening program aimed at normalizing its policy after years of stimulus measures to combat deflation and economic stagnation. The bank has been gradually tapering bond purchases and may now turn its focus to reducing purchases of super-long bonds with maturity of 10-25 years. Analysts predict that the BOJ will announce its bond buying plan for the upcoming quarter on Monday, detailing the allocation for different maturity zones. This shift in strategy could mark the beginning of a significant reduction in the BOJ's holdings of super-long bonds, potentially leading to a sell-off in this segment of the bond market. The bank has previously increased short-term rates and signaled a willingness to raise rates further if economic conditions meet its projections, as part of its efforts to normalize policy and shrink its balance sheet, which currently amounts to around 600 trillion yen, equivalent to Japan's GDP.

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