06:40 AM EDT, 06/16/2025 (MT Newswires) -- While the Bank of Japan is expected to leave its policy rate unchanged this week, there is a strong expectation among market participants heading into the meeting that the BoJ will adjust its plans for quantitative tightening (QT), said MUFG.

The BoJ is slate to release its policy statement at 10:30 p.m. ET on Monday.

Media reports in the run-up have stated that the BoJ is considering announcing plans to slow tapering from the start of the next fiscal year in April 2026 to provide more support for long-term Japanese government bonds (JGB).

After hitting a high of 3.20% on May 21, the 30-year JGB yield has dropped back and stabilized at just above 2.90%, supported in part by the expectations that the BoJ will slow tapering plans and the ministry of finance will reduce plans for long-term JGB issuance, wrote the bank in a note to clients.

According to a recent poll by Bloomberg, about two-thirds of Japanese economists who responded expected the BoJ to slow down tapering from next April. Since last August, the BoJ has reduced its bond purchases by 400 billion yen every quarter, so that by Q1 2026, monthly purchases would be almost halved compared with roughly six trillion yen before QT began.

BoJ officials are reportedly considering slowing the pace of QT by about half to a 200 billion yen reduction in monthly purchases each quarter. The recent softening of the yen could already partly reflect expectations for a cautious policy update from the BoJ this week, alongside negative spill-overs for Japan from the Middle East conflict, added MUFG.