TOKYO – The Bank of Japan should pick up the pace of tapering government bond purchases as the possibility of a pause in interest rate hikes will give the central bank more wiggle room to adjust the tapering plan, Mizuho Financial Group’s markets chief told Reuters.
Kenya Koshimizu, co-head of the global markets division at Japan’s third-largest lender, made the call ahead of the BOJ conducting a review of its existing bond tapering plan in June.
Voices of major market participants like Mizuho will form a basis for the upcoming review, with the BOJ’s shrinking debt market presence heightening the importance of private-sector banks on hopes they will return as major buyers of Japanese government bonds (JGBs).
“The pace of tapering was very moderate last year,” as there were fears that it could cause abrupt spikes in bond yields when combined with interest rate hikes, Koshimizu said in an interview on Friday.
But as heightened uncertainties over US policies and the global economy make it difficult for the central bank to keep raising rates for the time being, “the BOJ is likely to have more flexibility in adjusting the taper plan,” he said.
US President Donald Trump’s tariff plans have jolted financial markets and stoked fears of a global recession, making it less clear whether the BOJ can keep raising rates.
