TOKYO: The Bank of Japan said on Friday it will scale back buying of short-term Japanese government bonds at its first debt purchasing operation in December as a supply shortage resulting from its monetary expansion drive takes hold.

The BoJ said it will buy 450 billion yen ($3.81 billion) of one-year to three-year JGBs at its first operation in December, down from the 550 billion yen it purchased at its last operation in November.

Similarly, the central bank will cut purchases of three-year to five-year debt at its first operation next month to 450 billion yen from 550 billion yen.

The regular purchases of government bonds are a part of the central bank's aggressive quantitative and qualitative (QQE) easing scheme, which it expanded on Oct 31 to speed up money creation to head off deflation.

The BoJ's debt-buying operations have tightened market supply, driving the two-year yield below zero for the first time on Friday.

Copyright Reuters, 2014