Halister News

(Bloomberg) -- BOJ may try to incorporate some flexibility in its purchases of super-long JGBs, particularly the 25+ year sector, and provide guidance toward rate cuts later in the year as a means of lowering front-end rates, Goldman Sachs economists write in clients note.

• Don’t expect the central bank to set in motion a bear- steepening selloff across the JGB curve
• With a low and uncertain path for CPI expectations, any increase in nominal yields will translate into a jump in real rates that would be counter-productive
  • An increase in real rates could put JPY under an increasing appreciation pressure
• Risk of mis-communication or mis-interpretation of any shifts in JGB purchases would increase market expectations of an impending tapering and could impair the central bank’s pursuit of its price-stability target
• Expect BOJ to maintain its monetary-base target and current interest-rate policy
• Kuroda’s ability to coherently and comprehensively communicate the results of this assessment, as well as the direction of future policy, will be crucial in ensuring that BOJ’s commitment toward its price-stability target isn’t lost in translation
• NOTE: Some at BOJ Are Said to Still Favor JGBs in Any Stimulus Boost; BOJ to Consider Cut of Negative Rate to Minus 0.2%, Kyodo Says