By Kantaro Komiya and Eimi Yamamitsu
(Reuters) – The Bank of Japan will end its long-term yield control policy this year, most economists said in a Reuters poll , the new leadership of academic Kazuo Ueda is expected to scrap the complex easing program and restore the functioning of the bond market.
The end of yield curve control (YCC) has been in focus, with current Governor Haruhiko Kuroda wrapping up his second five-year term on April 8 following its sponsor, the Bank of Japan. year term. Additional adjustments to YCC within three months, if not outright abandonment, such as expanding the 14 annual yield cap range from 0.5%.
Responding to the question about the YCC, 14 26 respondents expected the BoJ to terminate the program in February this year 27 – According to the March 6 poll. Eight of them voted for April-June, four voted for July-September, and two voted for October-December. Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management, said he expects Ueda to cancel the YCC at its first policy meeting in late April. “A big change is justified.”
Four respondents said YCC will end next year, and eight more expect to be in or later Night. Nobody picked the option “BOJ won’t end YCC”.
Asked in a separate question what the BoJ would do if it adjusts the YCC before the end, 14 of 10 analysts opted to widen its yield range again after doubling its yield to 0.5% in December. The remaining nine economists expected the target to be short-term yields.
Japan’s 14 1-year government bond yield has breached the BoJ’s 0.5% ceiling even after the December adjustment It has also been raised several times as investors doubt the sustainability of YCC.
attribute the adjustment to improved market functioning,” said UBS chief economist Masamichi Adachi.
Half of 27 Respondents expected an additional YCC adjustment from April to June. Seven predicted it in the second half of 2023 and three in saw it in the first half.
KURODA’S LAST SURPRISE?
BOJ Governor Haruhiko Kuroda is unlikely to be in March Markets rocked at last BOJ policy meeting on 9th – , according to 28 % 28 of respondents who responded to a question said Ueda, who was nominated to be the next director general, would be more capable of enforcing any review or revision of Kuroda-era monetary easing.
Only one economist expects a surprise this week. Capital Economics’ Darren Tay said: “Waiting for the YCC until the end of the April meeting could trigger another massive speculative attack on the yield cap, which would be a big surprise.” Will force the Bank of Japan to buy more Japanese government bonds and further deteriorate the functioning of the bond market. “
Given uncertainty over whether wages will rise enough to keep inflation around its 2% target on a sustained basis, the central bank is unlikely to make a move on the YCC, sources familiar with the BOJ’s thinking told Reuters. BREAKING CHANGE.
Another poll question that allows multiple answers shows that 14 of 23 Respondents say the inflation outlook for the next fiscal year and above 2% will prompt the Bank of Japan to normalize its massive easing.
13 Economists picked a positive shift in Japan’s output gap as the trigger for normalization. Eleven picked wages outpacing consumer inflation, and seven pointed to the more pronounced side effects of BOJ policy in bond markets.
Analyst forecasts for Japan’s economic growth and economic growth are based on median estimates of approximately 28 respondents, consumer inflation and 2 Little changed from the month’s polls.
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