BOJ May Be Forced to Taper

The Bank of Japan (BOJ) may be intent on keeping its easy monetary policy, but with the central bank poised to run out of bonds to buy, it could be forced into tapering next year, analysts say.

“Government related funds will be selling bonds to the BOJ for the remainder of the year, but that supply will run out towards the end of 2015,” Bank of America Merrill Lynch rates strategist Shuichi Ohsaki told CNBC by phone. When that supply runs out, “the BOJ will have to change its current policy,” he said.

Tasked with dragging Japan out of decades of deflation, for the past two years, the BOJ has been pumping massive amounts of liquidity into the economy by buying government bonds.