BoJ Minutes of the 20th Round of the "Bond Market Group" Meetings

Views on the Amount of Reduction:

1. "The Bank should reduce the amount of its purchases of JGBs to zero, considering that JGB purchases are no longer its primary policy tool and its balance sheet has become unprecedentedly large."


2. "It is desirable for the Bank to reduce the amount of its monthly purchases to about one to two trillion yen, the level before the Bank greatly increased the purchase amount."


3. "It is desirable for the Bank to reduce the amount of its monthly purchases to about two to three trillion yen."


4. "An interim target of the Bank's monthly purchase amount should be about three trillion yen."


5. "If the Bank reduces the amount of its monthly purchases to about three trillion yen, that will be a clear message that it is committed to significant reduction."


6. "It is appropriate for the Bank to reduce the amount of its monthly purchases to about four trillion yen."


7. "We would like to suggest that the Bank initially reduce the amount of its monthly purchases to about five trillion yen and thereafter consider further reductions."

Views on the Pace of Reduction:

1. "The Bank should swiftly reduce the amount of its purchases of JGBs to its target level originally set to be achieved over around two years."


2. "Initially reducing the purchases by a significant amount and then implementing incremental reductions could prevent formation of investors' vigilance."


3. "Even if the Bank initially reduces its purchases of JGBs by a significant amount, an excessive rise in interest rates is unlikely to occur."


4. "A rapid reduction might result in an increase in volatility, thus reducing investor demand with deterioration in market functioning."


5. "It is desirable for the Bank to reduce the amount of its purchases of JGBs in a stepwise manner."


6. "The Bank should cautiously proceed with the reduction."


7. "A rapid reduction could hamper the stable issuance of JGBs by unnecessarily increasing market volatility."


8. "We would like to ask the Bank to take into account such divergence."

Views on the Guidance on Reduction:

1. "We would like to ask the Bank to announce the planned amount of JGB purchases per quarter in a range form."


2. "It is desirable for the Bank to pinpoint a specific amount of planned JGB purchases."


3. "The Bank should decide and announce the planned amount of JGB purchases for the next two years at the upcoming Monetary Policy Meeting."

Views on How to Proceed with Reduction in Each Maturity Segment:

1. "The Bank should proceed with the reduction mainly in the short- to medium-term zone."


2. "The Bank should reduce the amount of its purchases of JGBs mainly in the medium-term zone."


3. "Reducing the purchase amount mainly in the medium- to long-term zone would likely prevent a worsening of the supply and demand conditions."


4. "The Bank should place priority on reducing purchases of JGBs in the long-term zone."


5. "The Bank should place priority on reducing purchases of JGBs with residual maturity of up to 10 years."

Other Views:

1. "We expect some measures to restore the liquidity of these issues to be implemented."


2. "We would like to ask the Bank to conduct outright sales of its JGB holdings in addition to the reduction in the purchase amount."


3. "We would like to suggest that the Bank consider simplifying the current maturity segments."


4. "Given the current situation where the Bank's large-scale holdings of JGBs have led to concerns among some overseas investors over the fiscal soundness of Japan, it is desirable for the Bank to announce not only a plan for the reduction over the next one to two years, but also a more ambitious one over a longer-term horizon."


5. "It is desirable for the Bank to set a certain target for the amount of its JGB holdings on a stock basis and adjust the purchases accordingly."

Analysis details (08:01)

• Note, the BoJ said it will be releasing the details of the bond meeting at the July 31st announcement. 

19 Jul 2024 - 08:01- Fixed IncomeImportant- Source: BoJ