MNI POLICY: BOJ Cuts Scale of Longer-Dated JGB Buying

--Bucket Buying Reduced To Y50 Billion At Latest Op

     TOKYO (MNI) - The Bank of Japan Friday lowered the scale of its purchases

of Japanese government bonds with time to maturity of more than 25 years to Y50

billion, down from Y60 billion at the previous similar operation held on Sept

18.

     The bucket reduction, the first since July 19 when it cut the scale to Y60

billion from Y70 billion, is partly aimed at creating an environment to move

longer-end bond yields higher.

     In July, the BOJ board decided to allow bond yields to move widely and

flexibly reflecting developments in economic and price conditions as well as

U.S. Treasury bond yield moves.

     The U.S. 10-year Treasury bond yield rose above 3.00% but JGB yields,

including longer-end, are still stuck at low levels.

     Friday's decision to lower the scale of its purchase of longer-end bonds

might have reflected the BOJ thinking that JGB yields hadn't move flexibly and

didn't rise as BOJ officials predicted following the July policy meeting.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$,M$$FI$,MN$FI$]