Via Bloomberg today:
- The BOJ may expand monetary easing should the Government Pension Investment Fund lower its domestic bond allocation to 35%, analysts say.
In brief:
Barclays chief rates strategist for Japan research Akito Fukunaga:
- Reduction to 35% would signal the government’s “strong” determination to bolster stock market and raise sales tax
- Considering the “all-out” execution of Abenomics, it wouldn’t be surprising if BOJ decides to boost monetary easing (but notes Barclays’s base-case scenario is for no additional easing at today’s meeting)
SMBC Nikko strategists:
- Should GPIF reduce holdings in next 16 onths, monthly sales may exceed 1t yen ($9.1b); although such selling could be absorbed in secondary market, it would probably be a drag
- BOJ may step up bond purchases to cushion GPIF selling
