FX.co ★ No Urgency for Bond Policy Shift: BoJ Noguchi

The Bank of Japan (BoJ) will revisit its strategy for scaling back purchases of Japanese government bonds (JGBs) during its meeting in June 2025. The central bank plans to establish new guidelines for April 2026, aiming to provide greater long-term policy transparency, announced board member Asahi Noguchi in a recent address. Although no significant adjustments are deemed necessary at present, Noguchi emphasized a gradual and stability-oriented strategy for reducing the balance sheet. He pointed out that the central bank has substantial time to move towards policy normalization. As for the gross domestic product (GDP), Noguchi mentioned that Japan's economy is on a path to recovery, albeit with persistent inflation pressures due to rising food prices and a softer yen, which have exacerbated the costs passed on from imports. He cautioned about the increasing downside risks posed by steep U.S. tariffs implemented under the second Trump administration, which could lead to a 1930s-style economic bloc. Concerning interest rates, Noguchi argued against predetermined terminal policy rates, advocating for policy flexibility. He urged for "cautious optimism," promoting a balanced stance in the face of escalating global uncertainties.