Japan's Ministry of Finance (MOF) has officially stated it is not considering the buyback of Japanese Government Bonds (JGBs). This decision clarifies the separation between the ministry's fiscal debt management and the monetary policy tools employed by the Bank of Japan (BOJ).
Currently, the MOF conducts limited buyback operations focused on inflation-indexed bonds, with recent auction volumes reaching approximately ¥20 billion. This figure remains minimal compared to the BOJ's monthly bond purchases, which have totaled about ¥4.1 trillion.
The Bank of Japan is implementing a phased reduction of its bond-buying program. The central bank plans to decrease monthly purchases from the current level of ¥4.1 trillion to a target of ¥2 trillion by April 2027, representing a 50% reduction over two years.
While MOF officials explored the possibility of buying back super-long JGBs in mid-2025, they ultimately cited market instability and duration risk as reasons for caution. The recent announcement effectively halts further consideration of such interventions in the bond market.
