Analysis:BOJ's rate-hike path runs into Takaichi's bond market problems
The Bank of Japan (BOJ) is contemplating an early rate hike, but faces mounting political pressure to support the bond market, potentially offsetting any policy tightening. Japan's government bond yields have risen due to Prime Minister Sanae Takaichi's expansive fiscal agenda, raising borrowing costs and drawing criticism from the U.S. In May, Takaichi suggested BOJ Governor Kazuo Ueda buy more bonds to curb long-term rate increases.
Allies of Takaichi have expressed concern over higher yields and the BOJ's balance-sheet reduction. In July, a reflationist ally stated the administration pays significant attention to bond yield moves and relayed investor concerns over the BOJ's rapid balance-sheet reduction. Despite the political pressure, the BOJ is committed to policy normalization, despite the economic consequences.
Written by urgent.news from Channel News Asia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
