The Bank’s purchases of JGBs are curried out only in the context of the conduct of monetary policy and not in any way to finance the fiscal deficit. It is thanks to the government’s efforts toward fiscal consolidation that the Bank’s such explanation is persuasive.
If market participants have concern over the government’s efforts toward fiscal consolidation, the effects of the QQE will be dampened, due to an expansion in risk premiums. Once risk premiums expand, it would be difficult to control. Some market participants mention that there is little room for the expansion in risk premiums in the JGBs market due to the Bank’s large-scale purchases.