To an extent, slower growth is policy induced by the Chinese authorities as they aim to reduce vulnerabilities from rapid credit growth and make a transition from an investment-led economic model. What needs to be seen is whether China makes a soft landing and what are the implications for the rest of Asia.
Considering that the JGB market serves as the basis for a range of price formation in financial and asset markets, it is necessary to be fully vigilant against the risk of a buildup of various types of financial imbalances in a situation where the Bank’s presence becomes overwhelming in the JGB market and interest rates remain at very low levels.