BOJ QT Cuts Assets 15.6%, Yen Floor Takes Shape
Bank of Japan's quantitative tightening shrank its balance sheet by 15.6% since early 2024. Long-term yields surged past 4% while the yen stabilized. Here is how the mechanism works and what comes next.
The Bank of Japan has been shrinking its balance sheet faster than many expected. Since the peak in the first quarter of 2024, total assets have fallen by ¥116.9 trillion ($726 billion), a 15.6% reduction. The balance now stands at ¥639.6 trillion ($3.97 trillion), the lowest since the first quarter of 2020, according to the BOJ's own data.
The central bank chose quantitative tightening over steeper rate hikes to put a floor under the yen. Japan's currency had lost 53% against the US dollar since 2012, driving inflation through higher costs for imported energy and consumer goods. The BOJ wanted the
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