Bank of Japan Logged Record Loss on JGB Holdings Last Fiscal Year

By Megumi Fujikawa

TOKYO--The Bank of Japan reported a record loss on its holdings of Japanese government bonds in the last fiscal year, underscoring the heavy valuation hit from its pivot toward higher interest rates.

The Japanese central bank on Wednesday reported an unrealized loss of 45.441 trillion yen, equivalent to about $285.26 billion, on its JGB holdings in the year ended March.

That is worse than the 28.625 trillion yen loss recorded the prior business year, and marks the central bank's biggest loss since comparable data became available.

BOJ officials have long maintained that such losses don't affect monetary policy decisions since the bank intends to hold the bonds until maturity, meaning the paper losses won't be realized.

The BOJ has been gradually but steadily tightening policy settings since it exited negative interest rates in 2024, pushing up Japanese government bond yields.

That uptrend has accelerated recently due to concerns that as the Middle East conflict sends oil prices higher, the bank could fall behind the curve in combating inflation. If that continues, its book losses on JGBs could deepen.

Another factor driving JGB yields higher is the government's fiscal stimulus plans, which have firmed concerns over the nation's debt burden at a time when the central bank is reducing bond purchases.

In her latest announcement of the supplementary budget, Prime Minister Sanae Takaichi said the measure won't lead to an increased bond supply in the market.

The central bank continues slowly unwinding its stock portfolio, and also posted a record unrealized profit of 57.066 trillion yen on its holdings of exchange-traded funds for the fiscal year.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

May 27, 2026 04:25 ET (08:25 GMT)