Goldman Sachs: BOJ is reaching the limits of its stimulus program

Goldman Sachs Group Inc. is the latest to highlight that the Bank of Japan (BOJ) is reaching the limits of its stimulus program, just as nation’s bonds tumbled the most in more than three years.

As Bloomberg reports, “Goldman estimates the BOJ will need to buy about 115 trillion yen ($1.14 trillion) to 120 trillion yen of JGBs, or as much as 50 percent more than planned, to keep the monetary base expanding amid redemptions. That would be challenging as the central bank now holds 38 percent to 45 percent of JGBs with a residual maturity of fewer than 10 years, and holders of longer-dated paper are reluctant to sell.”

“The central bank holds only 24 percent of bonds with residual maturity greater than 10 years, according to Goldman.”