A ruling party official suggests selling BOJ-held ETFs to cover revenue loss from Japan’s food sales tax reduction without new debt.
A Liberal Democratic Party lawmaker proposed selling part of the Bank of Japan’s 37 trillion yen ETF holdings to fund a 5 trillion yen annual revenue shortfall from a food sales tax cut. The plan aims to avoid new debt issuance, which could pressure Japan’s fiscal position and bond markets.
The BOJ currently sells ETFs at a pace of around 330 billion yen annually, a rate that would take roughly a century to liquidate its entire portfolio. Investors may view accelerated sales as a shift away from the central bank’s cautious, market-friendly stance, potentially increasing supply pressure on Japanese equities.
Market participants are closely watching for any signs of policy changes, particularly as the BOJ balances fiscal demands with its stated preference to avoid disrupting stock prices.