BOJ Board Split on JGB Buying at June Meeting

The Bank of Japan's Policy Board was divided at its June 15-16 meeting over whether to stop reducing government bond purchases, according to minutes released on August 5. One board member argued that there was 'no reason at all to halt the reduction of the purchase amount' because the government bond market remained stable.

This member warned that if market participants interpreted the move as monetary financing, it 'could undermine the credibility of the Bank.' However, most board members agreed that it would take some time for investors in Japan to smoothly increase their JGB holdings and that continuing the current pace of reduction might have an unforeseen impact on market stability.

Some members noted the need to clearly explain that halting the reduction of bond purchase amount would be a measure aimed at preventing the JGB markets from becoming unstable, not supporting government financing.