BoJ hikes short-term interest rates by 25bps to 1.00%, as expected, while it pauses tapering of bond buys in which it will keep monthly pace of JGB buying at around JPY 2tln from April 2027

Says: Decision made by 7-1 vote as board member Asada dissented against a hike, while board member Tamura proposed tapering bond purchases by JPY 200bln per quarter from April 2027 onward, but the proposal was rejected by majority vote. Will continue to raise the policy rate in response to developments in economic activity, prices and financial conditions. Will examine the likelihood of realising baseline scenario as well as risks in considering the timing and pace of policy adjustment. No change in the current plan to reduce monthly JGB buying by JPY 200bln yen each quarter until January-March 2027. Is prepared to amend the bond-taper plan at future policy meetings if necessary. Will discontinue the practice of conducting an interim assessment of the bond-taper plan. Will respond nimbly, including by increasing JGB buying and conducting fixed-rate purchase operations, in the event of a rapid rise in long-term rates. Attention is needed on the impact of the future course of the Middle East situation on financial markets, FX markets, the economy and prices. Must pay attention to the effects of global AI-related demand and future FX moves on Japan’s economy and prices. Risk of a significant economic slowdown appears to have decreased compared with a while ago. Planned Monthly Bond Purchases Plans to buy JPY 75bln of JGBs with more than 25 years of maturity twice a month in July-Sept, unchanged from previously. Plans to buy JPY 100bln of 10-25 year JGBs twice a month in July-Sept (Prev. JPY 80bln, three times). Plans to buy JPY 335bln of 5-10 year JGBs twice a month in July-Sept (Prev. JPY 240bln, three times). Plans to buy JPY 320bln of 3-5 year JGBs twice a month in July-Sept (Prev. JPY 230bln, three times). Plans to buy JPY 355bln of 1-3 year JGBs twice a month in July-Sept (Prev. JPY 255bln, three times).