Japanese Prime Minister Sanae Takaichi urged Bank of Japan Governor Kazuo Ueda to increase government bond purchases to curb rising long-term interest rates. Ueda indicated the central bank would respond when necessary, while considering market reactions.
The Prime Minister's direct request to the Bank of Japan for increased bond buying signals potential government concern over rising long-term interest rates and their impact on the economy, potentially influencing future monetary policy decisions.
Japanese Prime Minister Sanae Takaichi urged Bank of Japan Governor Kazuo Ueda to increase government bond purchases to curb rising long-term interest rates, according to a Jiji news agency report citing unnamed sources. During a meeting in May, Takaichi called on Ueda to take 'appropriate steps to stabilise markets' and boost bond buying if needed.
Ueda responded that the central bank would consider market reactions but would act when circumstances require. The Bank of Japan has been gradually slowing its bond purchases since July 2024 to reduce its market presence and stimulate economic activity. In June, the BOJ decided to suspend further tapering from April next year, maintaining monthly purchases of approximately 2 trillion yen ($12.68 billion) in Japanese government bonds (JGBs).
This decision was seen by some analysts as a response to concerns that the BOJ's reduced buying could be contributing to already increasing yields. Highlighting its sensitivity to government concerns, the BOJ released a research paper on Tuesday suggesting that its tapering of bond purchases is likely having only a limited impact on pushing up long-term interest rates.