Bank of Japan faces calls to increase bond purchases

According to the Bank of Japan (BoJ), some market participants have addressed the regulator with a plea to increase the purchase of extra-long bonds or to stop tapering for that type of debt due to a sharp rise in its yields.

As noted by Reuters, such calls emphasize the difficulties on the way of the Japanese central bank to eliminate the remains of large-scale monetary stimulus.

Yields on ultra-long Japanese government bonds (JGBs) soared to all-time highs on Tuesday amid weak investor demand. Meanwhile, political pressure for more fiscal spending has intensified ahead of the upper house elections scheduled for July.

Meanwhile, market participants are divided over the desired pace of JGB purchases by the central bank in fiscal 2026. Some are calling for the bank to eventually stop them altogether. Others believe it should continue buying up to 3 trillion yen ($20.77 billion) a month.

However, most market participants surveyed by the BOJ favored maintaining or slightly slowing the pace of the tapering program, raising the possibility of a gradual reduction.