Asahi Noguchi says Bank of Japan should not act on rising super-long bond yields

Member of the Bank of Japan board Asahi Noguchi believes the central bank does not have to intervene into the bond market to act on the rise of super-long yields. 

According to Noguchi, the Bank of Japan should allow the market to move on its own rather than stepping into it unnecessarily. He says the surge is unexpected, yet calls it the market’s own judgment and considers it inappropriate for the central bank to intervene in the situation.

Yields on Japan's 10-, 20-, and 40-year bonds rose following his comments.

Noguchi also sees no need to make major changes to the central bank's plan to reduce bond purchases announced in July 2024, as the market will form long-term interest rates. This will allow flexibly adjusting the amount of bond purchases in case of sudden market fluctuations. It is not until April 2026 that the regulator will need to review its reduction plan. The Bank of Japan will update its plans at its board meeting, which ends June 17.

The central bank is now slashing its purchases by 400 billion yen ($2.8 billion) a quarter and is on track to reach monthly buying of around 2.9 trillion yen ($20.19 billion) by the spring of 2026.