The BOJ owned half of Japan’s outstanding government bonds for the first time, as of Sept. 30

The Bank of Japan held more than half of the government bonds outstanding for the first time at the end of September, after stepping up purchases to keep bond yields low even as its counterparts began raising interest rates. interest, data showed Monday.

The BOJ held 536 trillion yen, or 50.26 percent, of Japanese government bonds, which stood at 1.066 trillion yen. Japan’s central bank has offered to buy unlimited amounts of 10-year bonds to prevent the benchmark yield from rising above its 0.25 percent limit, as overseas yields continue to rise.

Gobbling up government bonds has reduced borrowing costs for businesses and households, but the BOJ’s growing balance sheet will pose a challenge if it decides to explore an exit. The central bank appears to be in no rush to modify its monetary easing policy at present.

In the six months to September, the BOJ posted an unrealized loss of 874.9 billion yen on its government bond holdings, the first under Governor Haruhiko Kuroda, after bond prices fell amid monetary tightening worldwide Bond prices move inversely to yields.

BOJ data also showed that Japanese household assets rose to ¥2.005 trillion, up 0.8 percent from a year earlier. The number remained above the 2,000 mark for four quarters as many preferred to keep cash on hand and consumption remained sluggish, a trend that has continued amid the COVID-19 pandemic.

Japanese Prime Minister Fumio Kishida wants to boost the income of financial asset families by encouraging them to put more cash to work by investing in riskier assets such as stocks and mutual funds.

Cash and deposit assets accounted for nearly 55 percent of total household assets, rising 2.5 percent to 1.1 trillion yen. Other types of assets, such as stocks and mutual funds, declined. Stocks fell 8.1 percent to 196 trillion yen and investment trusts fell 1.7 percent to 86 trillion yen.


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