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BOJ should steadily proceed with 'implicit' tapering - ex-BOJ Shirai
July 7, 2017 / 4:44 AM / 5 months ago

BOJ should steadily proceed with 'implicit' tapering - ex-BOJ Shirai

TOKYO (Reuters) - The Bank of Japan should steadily proceed with an “implicit tapering” of its bond purchases as any rise in yields will be temporary with many private investors waiting to buy on dips, a former central bank policymaker said on Friday.

A Japanese flag flutters atop the Bank of Japan building in Tokyo, Japan June 16, 2017. REUTERS/Toru Hanai

Sayuri Shirai, a former BOJ board member, said the central bank may temporarily accelerate purchases of Japanese government bonds (JGB) to contain rises in bond yield, but won’t have to buy huge amounts to cap yields around its zero percent target.

The BOJ has already been slowing its JGB purchases to around 50-60 trillion yen ($440-528 billion), despite a loose pledge to buy at a pace that increases its holdings by 80 trillion yen per year, Shirai said.

“What the BOJ is now doing is implicit tapering. That was probably the BOJ’s key aim in revamping its policy framework last year. The BOJ knew it was getting more difficult to maintain the current pace of bond buying,” Shirai said.

“The BOJ may briefly increase its bond buying when yields are rising as is the case now. But I don’t think it will be forced to keep buying at a pace well above 80 trillion yen to control yields as there’s always strong appetite for JGBs in the market,” she told Reuters.

Reporting by Leika Kihara and Sumio Ito; Editing by Sam Holmes

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