The report should give us a better understanding of what board members were thinking. In June, the Bank of Japan decided to keep the short-term interest rate steady at 0.0%-0.1%, which was expected. But they were shocked when they did not begin to gradually reduce their bond purchases as some had expected. Instead, they decided to stick with the March levels and push the decision on the plan to reduce bond purchases to their next meeting in July.
Although they delayed the cut, the Bank of Japan indicated that it plans to reduce its bond purchases over the next year or two. The Bank of Japan also scheduled a meeting with bond market participants from July 9-10 to discuss their policy decision.
Governor Ueda mentioned in the post-meeting press conference that when they decide to reduce their purchases of Japanese Government Bonds (JGBs), it will be a big deal and will start right after the July decision. He also hinted that a rate hike in July could be on the table, depending on incoming data.
Traders and analysts will be looking for signs of the bank’s confidence in the economy and any hints of changes in monetary policy in response to inflation and economic activity, especially with the recent weak correction in data released from Japan.