The Bank of Japan said it would buy an unlimited amount of bonds on Friday, as it sought to put a lid on domestic interest rates pushed higher by the broad sell-off in developed market bonds. David Pollard reports.
The hawks sharpening their talons in recent weeks .... As the ECB, the Bank of England and the Fed talk up the possibility of hikes ahead. But here at the BoJ, there was a decidedly dovish tone to its latest move. Saying it would buy an unlimited amount of 10-year bonds to put a lid on domestic interest rates. They've been pushed higher by a broad sell-off in bond markets on concerns over possible tightening. In a special operation on Friday, the BoJ also boosted the size of its regular auction-based purchases. Friday's increase in buying apparently going against recent attempts to reduce its massive debt purchases .... Leaving some investors puzzled over the general drift of central bank guidance. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "Here we have the G20 meeting where, if you remember back in 2008 2009, everyone did the same thing on the monetary front. Suddenly we're moving quite differently and I think that is an issue for anyone who is looking globally in terms of investment and the future trend of yields in particular which have presently very very unclear." And despite the move, former BoJ board member Sayuri Shirai told Reuters on Friday the Bank of Japan should steadily proceed with an "implicit tapering" of its bond purchases - as any rise in yields would be temporary.