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The Bank of Japan is expected to hold interest rates steady on Friday but reports said it could gradually reduce its vast hoard of government bonds as it shifts away from a long-running ultra-loose monetary policy.
The central bank raised rates in March for the first time since 2007 as it seeks to normalize policy without destabilizing the world’s fourth-largest economy.
Most analysts do not predict another hike when officials conclude a two-day policy meeting on Friday.
But the Nikkei business daily said Thursday they were “discussing adjustments” to the long-standing approach of spending big on bonds and other assets to pump liquidity into the system and keep borrowing costs down.
