Yields on 10-year Japanese government bonds climbed and the yen fell after the Bank of Japan trimmed its bond purchases for the first time in three months on June 1, Bloomberg News reported.
The central bank cut buying of five-to-10-year bonds by ¥20 billion to ¥430 billion. Five-year and 10-year yields rose 1 basis point each to -0.12% and 0.04%, respectively, following the move, while the yen fell 0.27% against the dollar as of 2:21 a.m. ET.
Under its policy of yield curve control, the BOJ guides 10-year yields at around zero percent through the purchase of Japanese government bonds, targeted at about ¥80 trillion annually.
Ten-year yields had fallen to 0.025% on May 29, the lowest close since April 3, amid heightened political uncertainty in Italy and trade tensions between the U.S. and its major trading partners, Bloomberg said.
The BOJ kept its monetary policy unchanged in the most recent meeting in April as it tries to achieve its 2% inflation target. Japan's core consumer price growth, excluding fresh food prices, slowed to an annual 0.7% in April before seasonal adjustment.
With inflation still far from target, BOJ Governor Haruhiko Kuroda said in the week of May 21 that the central bank has not reached a point where it can weigh an exit from extraordinary policy, but will start communicating such a move if inflation picks up and economic conditions are suitable, the newswire said. Some policymakers have also flagged the rising cost of prolonged easing.
As of May 31, US$1 was equivalent to ¥108.76.
