The Zhitong Finance App learned that on Friday, the Bank of Japan kept the benchmark interest rate unchanged as scheduled and said it would reduce the scale of purchases of Japanese treasury bonds. Before the Bank of Japan announced the interest rate decision, some media quoted information revealed by people familiar with the matter as reporting that the Bank of Japan may announce a reduction in the scale of debt purchases at this interest rate meeting. However, in reality, the Bank of Japan has adopted an “vague” attitude, stating only that it will reduce the scale of debt purchases and postpone issues related to reducing debt purchases until the next meeting.

The yen weakened in response as the Bank of Japan's latest measures to reduce debt purchases fell short of expectations. As of press release, the USD/JPY exchange rate rose 0.75% to 158.19.

In response, many analysts and strategists said that the Bank of Japan's failure to provide more details on reducing the scale of debt purchases disappointed the market, and the yen will continue its recent decline. At the same time, some analysts pointed out that the Bank of Japan's more cautious pace of policy normalization should be a favorable factor for the stock market.

Here are the opinions of analysts and strategists after the Bank of Japan announced the interest rate decision.

Japanese brokerage firm Monex Bonds and Foreign Exchange Trader Tsutomu Soma: The Bank of Japan's pace of austerity is expected to be slower than the market expected, and the central bank seems to be very cautious, which has stimulated the sell-off of yen. The interest rate difference between the US dollar and yen is likely to exist until the Federal Reserve cuts interest rates, which means that the yen will remain weak.

Alvin T. Tan, Head of Asian Foreign Exchange Strategy at the Royal Bank of Canada Capital Market: The Bank of Japan's decision was far more dovish than the market expected to significantly reduce the scale of debt purchases. It is currently unclear whether the Bank of Japan will actually decide to specifically reduce the scale of debt purchases or will only decide at the next meeting. The dovish decision means that the upward pressure on the USD/JPY exchange rate will continue and may rise above 1 dollar to 158 yen, despite the recent decline in US bond yields.

Andrew Jackson, head of Japanese stock strategy at Ortus Advisors Pte: Judging from the immediate reaction of the yen, the market certainly won't see this as a step in the right direction. I don't think the market has absorbed too many expectations; it is quite obvious that the Bank of Japan needs to reduce the size of debt purchases faster than they signal to the market. If they don't, and continue with monetary intervention, it would be a huge, unnecessary waste of money.

Homin Lee, Senior Macro Strategist at Lombard Odier: We prefer to wait until the press conference before judging the overall market impact. We believe that, given the news revealed by the media, some market participants expected too much hawkish signals from this conference. The Bank of Japan's guidelines seem to indicate that the size of debt purchases will be adjusted at the July meeting. This is our basic assumption. We can't rule out the possibility that Bank of Japan Governor Kazuo Ueda will provide more hawkish details at the press conference.

IG Asia Pte Market Strategist Jun Rong Yeap: The Bank of Japan's decision paved the way for the Japanese stock market to rise and the yen to weaken. What makes people breathe a sigh of relief is that the policy measures adopted by the Bank of Japan will be more careful. This may cause the market to take a dovish view of the Bank of Japan and accept the view that the weakening yen provides continued support to the economy, giving the market a green light to rediscover momentum for yen spread trading.

Tomo Kinoshita, Global Market Strategist at Invesco Asset Management Japan: I think this is a positive move because in the process of determining how to reduce the scale of debt purchases, if the decision-making method is poor, there is a risk that the yield will jump too much. This will enable the Bank of Japan to reduce risk as much as possible while tightening policies. After all, the reduction in the size of debt purchases was announced to the market today. This will have a positive impact on the stock market as it avoids the risk of a sudden rise in yields.

IG Markets analyst ?$#@$ Chen: The Japanese stock market will enjoy a long period of stability, while the cautious Bank of Japan may take a wait-and-see attitude for a longer period of time. However, for the foreign exchange market, the full recovery of the yen seems far away, despite the current expectation that the dollar will weaken. The cautious tone in the Bank of Japan's statement today may stem from a weak economy, implying that any further changes in its monetary policy will be carried out at a smaller, slower pace.

Vishnu Varathan, Head of Asian Economics and Strategy at Mizuho Bank: The liquidity provided by the Bank of Japan was at least welcomed by the stock market, and the initial positive correlation between the Nikkei Index and the USD/JPY exchange rate is still being maintained. But the market will soon be prepared for intervention risks, which may limit the extent to which risk is unbridled. As long as the reduction in the scale of bond purchases is clear, conservative, and gradual, there is no reason for the stock market to plummet.