- Recent rise in long-term rates likely won’t have an impact on our new bond taper plan to be decided in June.
- Most important thing is that things are different now than during period when we had YCC.
- We don’t look at the size of our JGB buying from standpoint of monetary policy.
- In tapering bond buying, giving market predictability, while maintaining flexibility, is most important.
- Whether to maintain current pace of bond taper beyond April 2026 will be something to be discussed leading up to the next policy meeting.
- Recent rise in super-long bond yields likely driven by global trend in yields, they are rapid but not necessarily abnormal.
- Don’t think it’s appropriate to recklessly intervene to correct bond yield moves.
- Cloud of uncertainty clearing somewhat in US-China trade tension.
- Markets restoring some calm, though uncertainty surrounding US tariff policy and impact on Japan’s economy high.
- BoJ shouldn’t move on rates when there is lack of clarity on economic outlook.
- Shouldn’t move on rates now, better to scrutinise developments for time being.
- Focus on bond taper plan for next fiscal year onward should be to avoid disrupting markets, BoJ doesn’t need to rush in trimming its huge bond holdings.
- BoJ doesn’t need to maintain its huge balance sheet at current levels, natural to shrink its size.
Noguchi has talked a lot today but the core message is that he doesn’t see any reason to intervene in the JGBs market or tweak the tapering because of the surge in long term yields. He’s also in a wait and see mode regarding further rate hikes as he’s waiting for more clarity.
The market is currently pricing 17 bps of tightening in 2025 which is basically a 50% chance of another hike by year-end.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
