TOKYO -- The Bank of Japan is quietly scaling back its massive bond purchases for the third time since the 2016 launch of its so-called yield curve control policy, as the central bank no longer needs to move as aggressively to hold down interest rates.

"The decline in purchases is due partly to the need to restore the functionality of the bond market," said Naomi Muguruma, chief fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.