The Bank of Japan is vigilant about the impact of ultra-long bond yield fluctuations on borrowing costs.

On May 28, Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank will be wary of the risk that large fluctuations in ultra-long-term bond yields may affect short-term borrowing costs and have a greater impact on the economy. The comments underscore the BOJ’s growing focus on the recent volatility in ultra-long-term bond yields, which could influence the central bank’s discussions on the pace of bond tapering next month. According to a survey summary released by the Bank of Japan, many bond market participants appear to be calling for maintaining or slightly slowing the pace of tapering from fiscal 2026. The focus will be on the BoJ’s response at its next policy meeting on June 16-17, when the BoJ will review its existing bond tapering program and propose plans for the next fiscal year and beyond.