Finance Minister Katayama Satsuki (片山皋月) said Prime Minister Takaichi Sanae (高市早苗) should tell overseas audiences that she is not a reflationist, and emphasized a policy of respecting the BOJ's independence. The government reiterated its readiness to intervene in the foreign-exchange market, seeking to signal policy continuity on fiscal discipline and monetary policy to markets.
In an interview, Finance Minister Katayama Satsuki (片山皋月) revealed that Prime Minister Takaichi Sanae (高市早苗) is calling for overseas audiences to be told that she is not a reflationist. This indicates an effort to dispel market misconceptions about the new government's view favoring expanded fiscal spending and pressure on the BOJ to maintain ultra-low interest rates.
Katayama Satsuki (片山皋月) said that concerns about her being discussed in the same terms as former Prime Minister Abe (安倍) overlooked the fact that Japan has now returned to inflation and that conditions are markedly different. While describing the rise in government bond yields as a global trend, she said there was no need for excessive concern.
On foreign exchange, she reiterated that the government was prepared to intervene in the market to support the yen and emphasized that it would take decisive action against speculative moves in exchange rates. Finance Minister Katayama Satsuki (片山皋月) met with leading figures in the U.S. financial sector and again demonstrated the government's stance that it would not undermine the central bank's independence.
Analysts cite the possibility of slowing the pace of monetary policy normalization and weakening fiscal discipline as concerns regarding the economic course after the prime minister took office. The key issue will be whether the stance of respecting the BOJ's independence continues, while markets will focus on whether the BOJ's path of interest-rate hikes can proceed without political interference.
Finance Minister Katayama Satsuki's (片山皋月) remarks are viewed as intended to emphasize policy continuity and central bank independence to international financial markets. With President Trump also expressing concern about the yen exchange rate, the government again indicated the possibility of foreign-exchange intervention.