Reuters report on the poll of expectations for the Bank of Japan.
BOJ will end YCC in 2023, 14 of 26 economists say; 4 say in 2024, 8
say in 2025 or later
- BOJ ‘s additional
YCC tweak will be widening 0.5% range, 14 of 23 economists say; 9 say
shortening target from 10yr
- BOJ will start
unwinding its ultra-easy policy in April, 7 of 28 economists say; 7
say in June, 6 say in July
Incumbent governor Haruhiko Kuroda ends his second five-year term on April 8.
- all but one forecast no surprise at Kuroda’s last rate-review this week
- half of economists in the survey said Ueda will carry out additional tweaks within three months, if not a total abandonment, to the YCC such as widening a 10-year yield cap range from 0.5%
More from the report:
- Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management, who expects Ueda to scrap YCC at his first policy meeting in late April. “A drastic change is plausible.”
- “While either means are possible, widening of the range would be more natural if the BOJ were to attribute the tweak to improvement of market functionality,” said Masamichi Adachi, a UBS chief economist.
- “Waiting until the April meeting to end the YCC risks another large speculative attack on the yield ceiling which would force the BOJ to buy more JGBs and worsen bond market functioning further,” said Darren Tay at Capital Economics.
- Sources familiar with the BOJ’s thinking have told Reuters the central bank is unlikely to make major changes to the YCC given uncertainty over whether wages would rise enough to keep inflation sustainably around its 2% target.
The Bank of Japan meet Thursday and Friday this week: