The Bank of Japan has reduced monthly Japanese Government Bond purchases to 2.9 trillion yen for the January-March 2026 quarter, the lowest level since its quantitative and qualitative easing program began in April 2013. Its balance sheet has contracted by about 94.3 trillion yen, or 12.6%, from its 2024 peak, while JGB holdings have fallen more than 10% from recent highs. The move follows a July 2024 plan to cut purchases by roughly 400 billion yen per quarter through January-March 2026, then by 200 billion yen per quarter, targeting about 2 trillion yen monthly by January-March 2027. The BoJ is also selling equity ETFs for approximately 330 billion yen annually and J-REITs (Japanese real estate investment trusts) for about 5 billion yen a year. Long-term JGB (Japanese government bond) yields reached 2.35%-2.40% in late March 2026, the highest since February 1999. The central bank says it will remain flexible and intervene if needed for market stability, but reduced intervention is allowing greater price discovery. Higher Japanese yields could draw domestic capital back from U.S. Treasuries, European sovereign bonds and other foreign markets, while narrowing rate differentials could weaken the yen carry trade (borrowing yen to invest in higher-yielding assets). Japan also faces domestic risks because corporations and the government have relied on ultra-low borrowing costs, while its government debt-to-GDP ratio remains the highest among developed economies.