* BOJ likely trimmed bond buying amount in March
* BOJ to cut short-term JGB buying in April
* Kuroda has said bond-buying amount may fluctuate
* BOJ next meets for rate review April 26-27
By Leika Kihara and Hiroyasu Hoshi
TOKYO, March 31 The Bank of Japan has no
immediate plan to remove a loose pledge to keep buying
government bonds at a set annual pace, sources familiar with its
thinking say, despite signs of a slowdown in its bond purchases.
The BOJ likely bought 8.58 trillion yen ($76.7 billion) in
Japanese government bonds (JGB) in March, down 1.62 trillion yen
from February when it bought the second largest amount on
record, Reuters estimates showed.
The slowdown came as the BOJ reduced purchases of short-term
and super-long bonds in several auctions during the month.
A schedule of its regular debt-purchasing operations
released on Friday showed the central bank will also trim the
amount of shorter-dated JGBs it buys in April.
Under a new framework adopted in September last year, the
BOJ shifted its policy target to interest rates from the pace of
money printing after more than three years of massive stimulus
failed to foster sustainable growth or lift inflation to its 2
While it no longer commits to buying government bonds at a
set pace, the BOJ left intact a loose pledge to increase its
bond holdings at an annual pace of roughly 80 trillion yen to
appease advocates in its board of aggressive money printing.
Some market players have speculated that the BOJ will soon
remove the loose guidance from a statement announcing its policy
decision to give itself more flexibility in how much bond it
buys each month.
But the central bank remains wary of doing so given
uncertainty on how increases in global bond yields - driven by
expectations of steady U.S. interest rate hikes - could affect
Japanese yields, the sources say.
"The BOJ's monthly bond buying amount tends to fluctuate on
various factors, so there's no guarantee it will keep falling,"
one of the sources said.
"It's necessary to look at the longer-term trend" before
deciding whether to remove the bond-buying pledge, another
source said, a view echoed by a third source.
The balance of the BOJ's bond holdings increased by roughly
70 trillion yen in March compared with a year ago, according to
estimates by Mizuho Securities, well below the central bank's 80
trillion yen pledge.
BOJ Governor Haruhiko Kuroda has stressed that the amount of
the bank's bond purchases could fluctuate depending on how much
is needed to achieve its yield targets, as it no longer targets
the pace of money printing.
Japanese bond yields have moved stably in March unlike in
January and February, when speculation of an early tapering of
the BOJ's asset purchases jolted the bond market.
"Market players have become accustomed to the BOJ's yield
curve control policy and so are less fearful of any slowdown in
the bank's bond purchases," said Tetsuya Matsunaga, senior
market analyst at Mizuho Securities.
The BOJ next meets for a rate review on April 26-27.
($1 = 111.8100 yen)
(Additional reporting by Sumio Ito)