Bank of Japan expected to trim bond buying by $100 bln in first year, survey shows
02/07/2024 05:00
By Noriyuki Hirata, Makiko Yamazaki and Takahiko Wada
TOKYO, July 2 (Reuters) - Japan bond market participants
expect the central bank to trim bond purchases by roughly $100
billion in the first year under a quantitative tightening (QT)
plan set for release this month, according to a survey conducted
by Reuters.
A Reuters survey of 19 banks, brokerages, insurers and asset
managers showed they expect the Bank of Japan to trim bond
buying by an average 16.1 trillion yen ($99.7 billion) in the
first year.
That would translate into monthly purchases of 4.65 trillion
yen, down from the current pace of around 6 trillion yen. In the
second year, the respondents expect the purchase amount to fall
to an average 3.55 trillion yen, the survey showed.
Combined, it would amount to a reduction of roughly 45
trillion yen during the two-year period.
Respondents of the Reuters survey were divided on how long
the BOJ will keep tapering with nine projecting it to last for
two years, while two thought it will end in an year. Several
others thought the BOJ will keep tapering beyond two years.
A slight majority expected the BOJ to adjust the pace of
tapering once a month or once every quarter, while others bet
the change will happen less frequently or on an ad hoc basis.
The survey was conducted June 25-July 1.
At a policy meeting last month, the BOJ decided to announce
in July a detailed plan on how it plans to reduce its huge bond
buying and scale back its nearly $5 trillion balance sheet.
The BOJ said it will come up with a taper plan that kicks
off in August, and covers a period of "around one to two years."
Governor Kazuo Ueda has said the amount of taper will be
"sizeable," without offering details. The BOJ will hold a
meeting with bond market participants on July 9-10 to collect
their views, before deciding on the plan at its July 30-31
policy meeting.
After buying bonds aggressively for a decade to reflate
growth, the BOJ has seen its holding of Japanese government
bonds (JGB) balloon to 576 trillion yen - roughly half of total
JGBs sold in the market.
Reducing the holdings is part of the BOJ's ongoing efforts
to phase out its massive monetary stimulus, which also led to an
end in March to eight years of negative interest rates.
($1 = 161.5700 yen)
(Reporting by Makiko Yamazaki, Noriyuki Hirata and Takahiko
Wada; additional reporting by Leika Kihara; editing by Lincoln
Feast.)
((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))