TOKYO: The Bank of Japan’s holdings of government bonds and agency bonds, excluding treasury discount bills, hit a new record ratio of 53.34% of the total amount outstanding, according to flow of funds data released by the central bank on Tuesday.

The bond holdings got a boost from a record amount of BOJ JGB buying in January after its decision in December to double the yield target band of 10-year Japanese Government Bonds (JGBs) to an implicit cap of 0.5%.

Under its yield curve control policy, the BOJ pledges to keep the 10-year bond yield at around 0%, while keeping the short term bond yield target around -0.1%.

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When including treasury discount bills, the share of the BOJ’s bond holdings account for 47.3%, or 582 trillion yen ($4.06 trillion) out of overall bondholdings, while those of overseas investors stood at 178 trillion yen, or 14.5% of overall holdings, the data showed.

New Bank of Japan Governor Kazuo Ueda’s main challenge will be to phase out its massive asset-buying stimulus programme and its yield curve control (YCC) scheme, which have come under criticism for distorting markets by keeping long-term interest rates from rising.