Bank of Japan Governor Kazuo Ueda and senior economic ministers from Japan’s newly formed government have pledged to monitor financial markets with a “strong sense of urgency,” Finance Minister Satsuki Katayama announced on Wednesday. n nKatayama expressed no objection to Ueda’s explanation that the central bank is gradually reducing monetary accommodation through incremental rate increases. n nFollowing the remarks, the Japanese yen weakened, reaching 156 against the U.S. dollar. n nMarket sentiment has been influenced by expectations that Prime Minister Sanae Takaichi’s administration will introduce a large-scale fiscal package supported by low borrowing costs. Reports from Kyodo News suggest the stimulus could surpass 20 trillion yen ($129 billion), with around 17 trillion yen allocated through a supplementary budget. n nAfter meeting with Ueda and Economic Revitalisation Minister Minoru Kiuchi, Katayama stated that the government and central bank remain committed to achieving stable inflation alongside rising wages and sustainable economic expansion. She reiterated their intention to maintain vigilant oversight of market movements and ensure clear communication. n nThe gathering followed Ueda’s prior discussion with Takaichi on Tuesday, during which they reviewed economic conditions, monetary policy, and currency fluctuations. n nA similar coordination occurred last October between the BOJ governor and ministers under former Prime Minister Shigeru Ishiba, where officials warned against excessive yen depreciation and agreed to closely observe market trends. At that time, they reaffirmed cooperation under the 2013 joint declaration aimed at reaching the BOJ’s 2% inflation objective. n nKatayama mentioned a proposal to adjust the technical aspects of the agreement while preserving its core principles. She clarified that the final size of the fiscal package remains undetermined and was not discussed in detail during the meeting. n nTakaichi, known for supporting expansionary fiscal and monetary policies, assumed office last month—an approach that complicates the BOJ’s efforts to steadily raise interest rates from historically low levels. n nAfter ending years of aggressive stimulus in 2023, the BOJ raised rates twice, most recently in January, and has since maintained its policy rate at 0.5%. Ueda has indicated readiness for another hike, possibly in December or January. n nFollowing his meeting with the Prime Minister, Ueda noted that Takaichi did not pressure him on monetary decisions and appeared to accept his view that gradual tightening supports long-term, sustainable growth. n nThe 2013 joint statement, established under former Prime Minister Shinzo Abe, committed the BOJ to achieving its inflation goal “at the earliest date possible” and emphasized coordinated action to overcome deflation. Despite Japan’s inflation exceeding 2% for over three years, the language remains unchanged. n nSome analysts argue the agreement is now outdated and enables unchecked fiscal expansion. n
($1 = 155.3400 yen) n
Reporting by Makiko Yamazaki and Leika Kihara; Editing by Tom Hogue and Shri Navaratnam
— news from Reuters
— News Original —
Japan policymakers agree to watch market with ‘strong sense of urgency’, yen weakens
TOKYO, Nov 19 (Reuters) – Bank of Japan Governor Kazuo Ueda and key economic ministers in the country ‘s new government have agreed to watch market developments with a “strong sense of urgency,” Finance Minister Satsuki Katayama said on Wednesday. n nKatayama also said she had “no particular objection” to Ueda ‘s explanation that the BOJ was gradually adjusting the degree of monetary support through interest rate hikes. n nSign up here. n nThe yen weakened after Katayama spoke, crossing 156 per dollar. n nEXPECTATIONS OF STIMULUS WEIGH ON YEN n nWednesday ‘s meeting came at a time when the yen is being driven down on market expectations that Prime Minister Sanae Takaichi ‘s new administration will deliver a huge spending package backed by low interest rates. n nThe Kyodo news agency reported on Wednesday Japan ‘s stimulus package could exceed 20 trillion yen ($129 billion) and be funded by an extra budget of around 17 trillion yen. n n”We reaffirmed our readiness to do our utmost to achieve stable inflation accompanied by rising wages, and sustainable economic growth,” Katayama told reporters after her meeting with Ueda and Economic Revitalisation Minister Minoru Kiuchi. n n”We also reaffirmed that we will watch markets with a strong sense of urgency and pursue careful communication,” she said. n nGATHERING FOLLOWS MEETING BETWEEN PM AND BOJ GOVERNOR n nThe gathering followed Ueda ‘s meeting with Takaichi on Tuesday, where the two discussed economic development, monetary policy and currency rate moves, according to the central bank chief. n nThe last time the BOJ chief met with the finance and economic revitalisation ministers of then premier Shigeru Ishiba was in October last year, when they warned against excessive yen falls and agreed to carefully monitor market developments. n nAt that gathering, they also reaffirmed that the government and BOJ would work closely together to achieve the bank ‘s 2% inflation target based on a joint agreement signed in 2013. n nKatayama said she proposed making a technical tweak to the joint agreement but keeping substantial elements unchanged. n nKatayama said the size of the government ‘s spending package has not been decided yet, and that Wednesday ‘s meeting did not elaborate on the issue. n nTAKAICHI AN ADVOCATE OF EXPANSIONARY FISCAL, MONETARY POLICY n nThe inauguration last month of Takaichi, who is known as an advocate of expansionary fiscal and monetary policy, has also complicated the BOJ ‘s efforts to gradually push up still-low interest rates. n nAfter exiting a massive stimulus last year, the BOJ raised interest rates twice including in January. While it has kept rates steady at 0.5% since then, Ueda has signalled the bank ‘s readiness to raise rates again either in December or January. n nSpeaking to reporters after his meeting with Takaichi, Ueda said the premier did not make any request on monetary policy and appeared to acknowledge his argument that gradual rate hikes will help the economy achieve sustainable, long-term growth. n nUnder pressure from then-Prime Minister Shinzo Abe to take bolder steps to beat deflation, the BOJ in 2013 signed the joint statement with the government and committed itself to achieve its 2% inflation target “at the earliest date possible.” n nThe statement also calls for the government and BOJ to make efforts to pull Japan out of deflation, language which has been retained despite the world ‘s fourth-largest economy now seeing inflation exceed the central bank ‘s 2% target for well over three years. n nSome analysts have criticised the joint statement as outdated and giving politicians an excuse to keep ramping up spending. n
($1 = 155.3400 yen) n
Reporting by Makiko Yamazaki and Leika Kihara; Editing by Tom Hogue and Shri Navaratnam