BOJ to consider pausing bond taper next fiscal year, sources say Reuters
The Bank of Japan is facing mounting pressure from rising inflation and global interest rate trends while trying to exit its ultra-loose monetary policy without disrupting markets.
A pause in bond tapering by the BOJ signals a more cautious approach to policy normalization, impacting global bond yields, currency markets, and investor sentiment towards risk assets.
The market's expectation of the pace and magnitude of BOJ's monetary policy tightening may be recalibrated, potentially leading to increased volatility in JGBs and the yen.
- · Japanese government bond holders
- · Japanese large-cap exporters
- · Global carry trade participants
- · Yen short sellers (if pause is prolonged)
- · Domestic Japanese bond bears
The yield curve in Japan will be less steep than previously anticipated, keeping borrowing costs lower for the Japanese government.
Global investors may seek higher yields elsewhere, potentially strengthening other major currencies against the yen.
Prolonged low rates could contribute to asset bubbles in Japan, similar to past quantitative easing periods globally.
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Read at Reuters — Technology (Google News)