The Bank of Japan (BOJ) is preparing to slow the pace of its bond purchase tapering starting from fiscal year 2025, according to sources close to the central bank’s internal discussions. This anticipated adjustment is driven by elevated volatility in the Japanese government bond (JGB) market, particularly in ultra-long maturities. The move reflects BOJ's effort to balance monetary policy normalization with the need to prevent disruptions in the fixed-income market.

Rising levels of sovereign debt are drawing renewed scrutiny from global bond investors as fiscal pressures intensify across advanced economies. The recent credit rating downgrade of the United States by Moody’s $MCO and tepid demand for Japanese government bonds (JGBs) underscore growing unease over debt sustainability in the world’s two largest economies.