Japan PM to vow nimble response to unexpected market moves, Nikkei reports

Japanese Prime Minister Sanae Takaichi is set to assure a prompt reaction to unforeseen economic and market shifts during a policy address next week, according to the Nikkei newspaper. Takaichi's remarks are scheduled for the inaugural day of an extraordinary parliamentary session on October 5. In addition to detailing the government's approach to annual debt issuance based on interest rate movements, Takaichi is anticipated to assure parliament of the country's readiness to swiftly adapt to any unexpected developments in the economy and financial markets.

Although the administration has ruled out the compilation of a supplementary budget, Takaichi will outline the government's nimble response contingent upon prevailing economic conditions. The Nikkei reports that the Prime Minister's Office was unavailable for immediate comment.

Takaichi's ambitious spending initiatives have drawn criticism from markets, particularly due to growing concerns over Japan's deteriorating fiscal situation, which has resulted in consecutive quarters of double-digit increases in government bond yields. Last month, in an interview with the Yomiuri newspaper, Takaichi revealed that the government aims to cap new bond issuance at 40 trillion yen ($255 billion) for the fiscal year's budget.

The administration has also resisted market perceptions labeling its policies as reflationist, emphasizing the importance of maintaining sound fiscal management. However, the administration's inability to provide specifics on funding a plan to temporarily suspend a levy on food items, as well as an anticipated rise in defense spending, has persisted in keeping bond markets on edge.