Following the conclusion of the first day of meeting with market participants, the Bank of Japan (BoJ) said that received various opinions from survey participants, including the idea of reducing monthly purchasing to around ¥2-3 trillion, or keeping purchasing around ¥4 trillion.
“Bond market participants’ views on the pace of tapering included the idea of tapering at a set pace quickly, or tapering quickly at a set pace and then tapering moderately in stages, or tapering gradually over two years,” the BoJ said.
Additional conclusions
Compared with foreign central banks, a reduction of ¥2-3 trillion is desired.
Bond purchases should ultimately serve as a monetary tightening tool, indicating that a zero purchase amount is crucial.
A gradual reduction targeting ¥1-2 trillion would be ideal.
Considering IRRBB principles, a reduction of ¥4 trillion should be appropriate given the limited flexibility in domestic bond operations.
The BoJ should aim for a reduction to around ¥5 trillion and if the bond market situation stabilises, then further reductions should be considered.
The BoJ is holding face-to-face meetings with market participants over the next few days. Three meetings have been scheduled with banks, securities firms and those who buy bonds for financial institutions to discuss the reduction of its purchases of Japanese Government Bonds (JGBs), which will be announced at the next meeting on July 30-31.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
