BoJ official sees no need to act against rising JGB yields

The Bank of Japan’s tapering of its bond purchasing programme should continue, a member of its monetary policy board has said, as the rise in yields over recent weeks had not been disruptive and merely reflected market expectations.

Speaking to business leaders in Miyazaki today (May 22), Asahi Noguchi noted that yields on 10-year Japanese government bonds (JGBs) had risen to nearly 1.6% in March. This compared with around 1.1% at the start of the year and around 0.8% last August.

“I personally believe that this rise – albeit rapid – cannot be regarded as disruptive, as it seems to have mainly reflected expectations among market participants of a higher terminal policy rate, given Japan’s higher-than-expected economic growth and upswings in prices,” he said.

Noguchi’s remarks came after yields on 30- and 40-year JGBs rose to record highs on May 20, of 3.14% and 3.6% respectively. The yield on the 10-year bond increased to 1.5% on the same day, having previously been around 1.3% on May 6.

Rising yields have prompted discussions about whether the BoJ should continue with the tapering of its monthly bond purchase programme. Announced last July, the plan aims to gradually reduce the amount of monthly JGB purchases from around ¥6 trillion ($41.7 billion) to ¥3 trillion by the end of the first quarter of 2026.

Noguchi waved away the concerns: “In my view, it is unnecessary at this point to make any major changes to the current plan.”

His view is broadly in line with that of the market. In a BoJ survey published on May 20, most bond market participants said they saw no need for the bank to change its current taper strategy. However, some respondents said they wanted the BoJ to buy more super-long JGBs, as liquidity had declined in that maturity segment of the market.

The BoJ’s current taper plan is due to end in March 2026. Board members are scheduled to finalise the details of its balance sheet strategy beyond that date at the time of their next policy announcement on June 17.

The survey revealed differing opinions on how the BoJ should proceed. Some market participants wanted it to continue gradually tapering the monthly JGB purchases to a final amount of between ¥1 trillion and ¥2 trillion, while others said the bank should maintain it at ¥3 trillion. Some called for an end to the bond purchasing programme altogether.

Noguchi stayed vague: “The bank will need to examine the reduction plan for April 2026 onward from a longer-term perspective.”

Correction, June 2, 2025: The original version of this article stated that the current taper plan was due to end in June 2026. This has been amended to March 2026