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Mizuho Financial Group (NYSE:MFG) is urging the Bank of Japan (BOJ) to speed up its tapering of government bond purchases, citing increased flexibility due to the likelihood of a pause in interest rate hikes. Kenya Koshimizu, co-head of Mizuho's global markets division, shared this view ahead of the BOJ’s June review of its current quantitative tightening (QT) strategy.
Last year’s gradual tapering was designed to avoid sharp bond yield spikes amid rate increases. However, with mounting uncertainties around U.S. economic policy—particularly under President Donald Trump’s new tariffs—and growing recession fears, Koshimizu believes the BOJ can now move more decisively.
The BOJ currently holds nearly half of all outstanding Japanese government bonds (JGBs), significantly impacting market liquidity and price discovery. Koshimizu stressed the need to restore bond market functionality, especially as private banks are expected to take a more active role in purchasing JGBs.
While he refrained from suggesting a specific pace for tapering, he emphasized that it doesn’t need to remain as cautious as before. Under the BOJ’s QT framework, monthly bond purchases are set to be halved to 3 trillion yen by March 2026.
Koshimizu also noted Mizuho’s openness to reentering the U.S. Treasury market, having reduced exposure in recent years. The global appeal of highly liquid assets remains strong amid economic turbulence.
Despite short-term volatility, Koshimizu expressed long-term confidence in Japan’s economic outlook, citing a shift in corporate strategy from cost-cutting to growth, driven by the nation’s exit from deflation.
This perspective from Japan’s third-largest lender adds weight to the BOJ’s upcoming policy discussions as it navigates QT amid an evolving global landscape.
