With regards to the BOJ, you write that "analysts are expecting further easing of the cap if not dropping YCC entirely". Where are you seeing this? Is that really possible given the level of Japanese government debt and the loss of credibility it would incur after drawing a line in the sand at 25 bps for so long?
Bloomberg and CitiGroup economists project that after Governor Kuroda steps down in April, the BoJ will move towards normalization of policy. With the BoJ purchasing record amounts of JGBs daily, owning nearly 60% now of the 10y tenor, at the very least a continued rise in the YCC band is expected. Analysts view it more as a reestablishment of credibility/moving into a new era for the BoJ, and Kuroda stepping down is the perfect time to rationalize the policy change.
With regards to the BOJ, you write that "analysts are expecting further easing of the cap if not dropping YCC entirely". Where are you seeing this? Is that really possible given the level of Japanese government debt and the loss of credibility it would incur after drawing a line in the sand at 25 bps for so long?
Bloomberg and CitiGroup economists project that after Governor Kuroda steps down in April, the BoJ will move towards normalization of policy. With the BoJ purchasing record amounts of JGBs daily, owning nearly 60% now of the 10y tenor, at the very least a continued rise in the YCC band is expected. Analysts view it more as a reestablishment of credibility/moving into a new era for the BoJ, and Kuroda stepping down is the perfect time to rationalize the policy change.