BoJ to offer guidance on bond buying operation after scrapping YCC, ending negative rates – Reuters

Dhwani Mehta FXStreet

Citing four sources familiar with the Bank of Japan’s (BoJ) thinking, Reuters reported on Tuesday that the BoJ is said to offer some form of numerical guidance to markets on how much Japanese government bonds (JGB) it will continue to purchase after ending negative rates and its yield curve control (YCC) policy.

Additional takeaways

"The BoJ would have to keep buying government bonds to some extent and present some form of guidance to avoid any abrupt spike in yields. The bond buying will likely be used as a backstop against an unwelcome spike in yields."

The Japanese central bank could set loose quantitative guidance as among its options. And that they should roughly maintain the current bond-buying pace even after scrapping YCC.”

Market reaction

USD/JPY is consolidating its recent uptick to near 147.60, trading 0.34% higher on the day at 147.40, as of writing.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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