Lower BoJ profits not a major drag on public finances

If we’re right that the Bank of Japan will lift its policy rate to 1.5% by 2027, its net interest income will turn negative over the next couple of years. However, its overall net income should remain positive as the Bank is still earning sizeable amounts on its equity holdings, which it is scaling back only slowly. The upshot is that developments in the BoJ’s profits won’t have a major influence on the public finances.