as a nod to government concern that fewer purchases could let already-rising yields climb further. Yet the BOJ also published research saying its tapering likely has only a limited impact on long-term rates, underscoring the tension between political pressure to keep borrowing costs contained and the BOJ’s desire to normalize policy without sparking market stress.
Why should I care?
For markets: The BOJ’s 2 trillion yen-a-month JGB buying can still feel like a backstop.
If investors believe political leaders want the BOJ to step in quickly when long-term yields rise, they may start pricing the central bank as a stronger buyer of last resort. That matters even if day-to-day purchases don’t change much: the expectation of intervention can lower the “term premium” – the extra yield investors demand for holding long-dated bonds – by reducing uncertainty about how far yields can jump in a selloff. A softer ceiling on Japanese rates can also keep the Japan–US rate gap wider for longer, which typically leaves the yen more vulnerable than it would be if markets thought JGB yields could rise freely. That dynamic helps explain why USD/JPY can stay elevated around levels like 157.7700 per dollar.