BOJ May Pause ¥500 Trillion Bond Taper as Market Turbulence Drives Yields Higher
Updated
Updated · Reuters · May 19
BOJ May Pause ¥500 Trillion Bond Taper as Market Turbulence Drives Yields Higher
3 articles · Updated · Reuters · May 19
June 15-16 is when the BOJ will decide whether to pause or slow bond tapering for fiscal 2027, with sources saying a less aggressive plan is now firmly on the table.
Surging JGB yields and broader market turbulence have raised concerns over fiscal strains and inflation, prompting the BOJ to prioritize liquidity over a faster balance-sheet runoff.
Investor meetings starting Thursday are expected to heavily shape the decision; options range from keeping purchases near ¥2 trillion a month to slowing quarterly cuts to ¥100 billion.
The BOJ still plans to stick with its current taper through March 2027 and sees no immediate need for emergency bond-buying, reserving intervention for disorderly yield spikes.
Since QT began in 2024, BOJ bond holdings have fallen nearly 20% from a roughly ¥590 trillion peak, but it still owns 49% of Japan's government bond market.
Is Japan's central bank trapped between a market crash and a currency collapse?
With Japan holding $1.2T in US debt, could its next move trigger a global bond crisis?
Japan’s Debt Crisis Unfolds: BOJ Policy, Fiscal Expansion, and Global Financial Volatility in 2025-2026
Overview
The Bank of Japan (BOJ) has reduced its bond holdings by nearly 20% since late 2023, mainly through the runoff of maturing Japanese Government Bonds. Despite this, the BOJ still owns almost half of all JGBs, making its actions highly influential on bond yields and Japan’s debt costs. This dominant position means any move to reduce bond purchases can create significant market volatility, as highlighted by BOJ board member Hajime Takata’s warning about market fragility. The BOJ now faces the challenge of balancing its quantitative tightening with the need to maintain stability in a sensitive bond market.