Bank of Japan May Pause Bond Taper Amid Market Volatility
The Bank of Japan is weighing a pause in its quantitative tightening plan for fiscal 2027 to stabilize jittery bond markets. This potential shift comes as rising yields threaten the spending plans of Prime Minister Sanae Takaichi and increase the costs of servicing national debt.
The Bank of Japan is considering pausing its bond-tapering program in fiscal 2027 to stabilize markets as 10-year yields reached a 30-year high of 2.8%. This shift follows a decade of stimulus and current quarterly reductions of 200 billion yen in monthly bond purchases. A pause would protect Prime Minister Sanae Takaichi's debt-funded spending plans from rising borrowing costs and market volatility.
Japan policymakers are weighing a halt to quantitative tightening as uncertainty over the conflict in Iran keeps bond markets jittery. Two people familiar with the deliberations said there is no consensus, but a pause is increasingly the preferred option.
