JGB Market Compass
- Dec 21, 2023
Implications of 2006 end to ZIRP for unwinding of NIRP today
Key points
- We continue to project BoJ will wind down negative-interest-rate policy (NIRP) with 10bp rate hike as early as January Policy Board meeting
- End to NIRP expected to create market turmoil and send 10-year JGB yield sharply higher
- This is because market does not appear to have priced in an end to NIRP, depth of dip-buying demand is uncertain, and Bank has yet to explicitly rule out successive rate hikes