BOJ keeps purchase of JGBs unchanged in July-September

By Junko Fujita

TOKYO, June 30 (Reuters) - The Bank of Japan plans to keep its purchases of Japanese government bonds across all maturities unchanged in the coming quarter, it said in a statement on Thursday, going against the expectations of some analysts.

Focus for the announcement was on whether the central bank would boost the amount of bonds with longer maturities it would offer to buy in the July-September quarter, as yields on the longer ends hover near their highest levels since 2016.

"Upward pressure on Japanese government bond yields has eased as yields on overseas bonds started falling," said Takayuki Miyajima, senior economist at Sony Financial Group.

U.S. Treasury yields declined for a second consecutive day on Wednesday, as the market took a cool view of the Federal Reserve's ability to corral inflation without throwing the economy into recession.

"The BOJ's conclusion probably was that if the yields started to rise, the bank could conduct extra bond buying operations to cap the climb," Miyajima said.

In Japan, yields on 30- and 40-year bonds hit their highest levels in more than six years on Tuesday, making the spread between two- and 30-year yields JP2JP30=TWEB at one point the widest since December of 2015. The yields have eased since then.

Strategists said the rise was fuelled by speculation that the Bank of Japan would eventually adjust its ultra-easy policy.

The central bank has repeatedly said it would defend its ultra-loose monetary policy, making it an outlier as central banks elsewhere hike interest rates to fight rising inflation.
Reporting by Junko Fujita; Editing by Raissa Kasolowsky and Tom Hogue

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