The Bank of Japan (BOJ) kept interest rates unchanged and said it would slow the pace of its government bond purchases, AFP reported.

The central bank spent many years buying Japanese government bonds (JGBs) to keep yields low as part of its ultra-loose monetary policy aimed at driving out stagnation and harmful deflation.

But last year, the BOJ began to abandon this easing program as inflation began to rise and the yen weakened.

After raising interest rates for the first time since 2007, the bank began to reduce its debt purchases.

Since then, it has raised borrowing costs several times to 0.5%, their highest level in 17 years, and continued to buy fewer bonds.

However, according to analysts, the uncertainty caused by US President Donald Trump's trade war has prompted the bank's representatives to refrain from further increases. On June 17, they again held interest rates steady, while stating that they would slow the pace of JGB purchases.

“This measure was taken to avoid the possibility of unusual volatility in government bond yields, which would have a negative impact on the economy,” said bank governor Kazuo Ueda.

“We believe it is appropriate for the BOJ to reduce JGB purchases in a predictable manner while ensuring flexibility,” he added. | BGNES