Chart of the week: Japan’s battle to hold down bond yields

Bank of Japan holdings of Japanese government bonds (% of total) chart

The Bank of Japan has pledged to maintain its “quantitative and qualitative easing” (QQE) policy, which involves buying enough Japanese government bonds (JGBs) to keep the ten-year JGB yield within a range of -0.1% to +0.1%. The bank has already bought vast amounts of JGBs over the past four years as part of its plan to lift Japan’s inflation rate to around 2%.

This has made it the largest holder of JGBs, owning more than 40% of all outstanding bonds. However, with inflation still below target and ten-year JGB yields recently creeping above 0.1%, it seems likely that it will accumulate many more.