BOJ Lifts Purchases for JGBs in 1-3 Year, 3-5 Year Maturities

The Bank of Japan (BoJ) is not making significant changes to its bond-buying strategy, despite liquidity issues in the Japanese government bond market. The BoJ plans to reduce the number of operations but maintain the purchase amount, which may disappoint market players expecting more tapering. The BoJ's actions have reduced market volatility and trading volumes, and while some expect yields to rise, most believe the changes are insufficient to restore price discovery. The market remains subdued, with limited trading activity in key bond maturities.

What are the implications of the Bank of Japan's actions on liquidity in the bond market?

What concerns did Governor Carota express regarding the trading of bonds?