BOJ’s Ueda Refrains From Hinting at Action Over Bond-Yield Surge

Kazuo Ueda, governor of the Bank of Japan (BOJ), speaks during a news conference at the central bank's headquarters in Tokyo, Japan, on Thursday, May 1. The BOJ left its benchmark rate unchanged while pushing back the timing for when it expects to reach its inflation target amid intensified uncertainties due to US tariff measures. Photo by Toru Hanai /Bloomberg

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(Bloomberg) — Bank of Japan Governor Kazuo Ueda refrained from indicating he’s prepared to take action in the bond market after yields on super-long dated securities hit a record high, amid a continuing effort to improve trading conditions.

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“I want to refrain from commenting on specifics on short-term moves in bond yields,” Ueda told reporters in Banff, Canada, Thursday after a meeting of Group of Seven finance and central bank chiefs. “But I will keep watching them closely, of course.”

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Ueda’s remarks suggest he prefers to be patient over the developments after the BOJ’s massive, years-long bond buying campaign left it holding more than half of all outstanding government bonds, hampering the market’s functioning. Japan’s super-long bond yields reached a fresh record high earlier this week, with some market participants pointing to the need for intervention by the central bank. 

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The BOJ concluded two days of hearings with bond market participants on Wednesday as it prepares to review of its bond-buying plans at a board meeting next month. Big life insurers and pension funds expressed concerns over super-long bond yields and sought action by the central bank.

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After more than a decade of asset purchases, the BOJ embarked on a quantitative tightening campaign last summer, announcing that it would reduce monthly purchases by ¥400 billion ($2.8 billion) each quarter. It still remains the largest holder of Japan’s government bonds, with about half the market.

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Japan’s 30-year and 40-year bond yields rose to a record high earlier this week. Analysts have blamed the moves partly on concerns over Japan’s fiscal policy, as politicians mull stimulus ideas ahead of an upper house election in July. Prime Minister Shigeru Ishiba signaled caution over additional spending this week, saying the nation’s financial conditions are worse than Greece’s.

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Analysts also cited the impact of higher US yields and the prospect of the BOJ’s quantitative tightening for the spike in yields.

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Ueda’s remarks deepen the cautious tone after board member Asahi Noguchi warned Thursday against conducting reckless intervention in the market, as asset prices often move in a volatile manner in a reflection of shifting views.

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Under its current plan, the BOJ is on course to reduce its monthly buying to around ¥2.9 trillion by the spring of 2026. Based on the BOJ’s hearings, the market appears widely divided on whether the pace of reductions should slow or accelerate or hold steady.

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The central bank will update its plans to account for the period from April 2026 at a board meeting that concludes on June 17. 

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