Economic Revitalization Minister Jōnai Minoru (城内実) of the Takaichi administration insisted at a post-Cabinet meeting press conference that “reflationary policy is over.” Alongside developments in the Bank of Japan’s monetary policy, the policy direction is drawing market attention as the yen’s depreciation and bond price declines continue.
On the 25th, Economic Revitalization Minister Jōnai Minoru (城内実) of the Takaichi administration claimed at a post-Cabinet meeting press conference that the Abenomics-style reflationary policy was over. He indicated that the policy of maintaining monetary easing while conducting fiscal policy flexibly would continue, but provided no detailed explanation, leaving markets to assess the reaction.
While Governor Ueda (植田) of the Bank of Japan indicated that accommodative financial conditions would remain in place even after the change in the policy rate, the Bank of Japan is exploring an exit strategy. The Takaichi administration’s monetary policy is viewed as incompatible with the Bank of Japan’s direction, and policy management based on maintaining accommodative conditions appears set to continue.
Markets have maintained the trend of a weaker yen and lower bond prices. In the bond market on the 25th, the yield on newly issued 10-year Japanese government bonds, the benchmark for long-term interest rates, rose as high as 3.115%. The exchange rate remained around ¥158 to the US dollar, while the possibility of a break above ¥160 has been cited.
Economic commentators have suggested that the United States pressured Japan to reconsider its reflationary policy. Even against the backdrop of moves calling for a correction of the yen’s depreciation and inflation, they point out that no fundamental policy shift by the Takaichi administration can be seen.