New investor attack on the BoJ’s policies

📍This Wednesday, we have seen that the yield gap imposed by the BoJ on Japanese 10-year bonds has been broken again. Recall that the BoJ is one of the few central banks that have not jumped on the interest rate hike policy bandwagon.

📍Given the state of the global economy, and the steady growth of inflation in Japan, some investors believe that the BoJ’s ultra-loose policies are proving ineffective. Therefore, since the beginning of the year, foreign investors have been flocking to JGBs, aiming to see Japan remove its Yield Curve Control (YCC) policy.

📍For the time being, Japan has reacted by buying YEN 300 billion in 10-year bonds and YEN 100 billion with a maturity between 10 and 25 years. In addition, to prevent further speculative attacks, it has quadrupled the minimum fee charged to financial institutions for borrowing Japanese 10-year bonds.

📍Several experts believe that the BoJ will maintain its policy until at least the next meeting of the Japanese central bank in March, when they expect the new head of the BoJ, Haruhiko Kuroda, to reverse this measure and begin a new Hawkish phase in the Asian country.

Source: Investing