The Bank of Japan published the minutes of its 24th Bond Market Group meetings with commercial banks, securities firms and buy-side participants, showing that market participants generally view the current reduction in Japanese government bond (JGB) purchases as proceeding smoothly. Participants said the gradual and predictable taper had not caused market disruption or higher volatility, while liquidity and price discovery were improving as more JGBs became available in the market. Most views supported keeping the current reduction plan unchanged to preserve predictability and market stability, although some participants argued for a faster pace and others said the plan might need revisiting if long-term supply and demand conditions remained strained. Participants reported that yields had risen across the curve since March, with especially sharp increases in long and super-long maturities in mid-May, while supply and demand remained stable in the short to medium sector but more fragile further out the curve. Views diverged more clearly on purchases from April 2027. Some argued there was little need to cut monthly buying below JPY 2.1 trillion, while others favored slower or continued reductions toward about JPY 1.7 trillion, JPY 1.3 trillion, or eventually zero. Additional comments focused on how to allocate purchases by maturity, persistent distortions and weak liquidity in the super-long sector, the need to monitor money market effects as the Bank's balance sheet shrinks, and the future role of the Securities Lending Facility, with some participants saying earlier easing measures may now be less necessary and others calling for further support where the Bank still holds a large share of specific issues.
Bank of Japan2026-06-02
Bank of Japan publishes Bond Market Group minutes showing support for current JGB purchase reduction plan and split views on post April 2027 purchases
The Bank of Japan published minutes of its 24th Bond Market Group meetings, indicating that market participants see the current reduction in Japanese government bond purchases as smooth, with improved liquidity and price discovery and no significant rise in volatility. Most participants supported maintaining the existing taper plan to preserve predictability, though views diverged on the pace of reductions after April 2027 and on the allocation of purchases by maturity and use of the Securities Lending Facility.