Japan Begins QE Tapering: BOJ Hints It May Purchase 18% Less Bonds Than Planned
Buz Investors Japan Begins QE Tapering With the Fed expected to further tighten financial conditions following its now guaranteed March 15 rate hike, and the ECB recently announcing the tapering of its QE program from €80 to €60 billion monthly having run into a substantial scarcity of eligible collateral, the third big central bank – the BOJ – appears to have also quietly commenced its own monteary tightening because, as Bloomberg calculates looking at the BOJ’s latest bond-purchase plan, the central bank is on track to miss an annual target, by a substantial margin, prompting investor concerns that the BOJ has commenced its own “stealth tapering.” While in recent
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Japan Begins QE Tapering
Some more details: the central bank forecast purchases of 8.9 trillion yen in bonds in March, based on the midpoint of ranges supplied in the operation plan. Maintaining that pace for 12 months will see it accumulate about 107 trillion yen of debt. At the same time, 41 trillion yen of existing holdings will mature, leaving it with a net increase of 66 trillion yen, well below the stated goal of 80 trillion yen.
The BOJ appears to be joining other banks that are seeking to jumpstart the “carry trade” for local banks and pension institutions, by steepening the yield curve. The step-back from buying super-long bonds, those with more than 10 years to maturity, comes after Governor Kuroda and his colleagues said in September that an “excessive” decline in the yields has placed a heavier burden on companies seeking to meet pension obligations.