Bank of Japan's tapering plans face scrutiny from Takaichi's economic advisers
The Bank of Japan's plan to gradually reduce its bond purchases is being questioned by economic advisers to Prime Minister Sanae Takaichi. According to Nikkei Asia, the advisers argue that tightening at a time of high energy prices could weaken the economy. The dispute revives debate about the balance between the BOJ's independence and political pressure.
The Bank of Japan's plan to gradually exit years of ultra-loose monetary policy is being questioned by economic advisers to Prime Minister Sanae Takaichi. According to Nikkei Asia, the advisers argue that reducing bond purchases on the current schedule could slow growth without resolving short-term pressure on the yen. BOJ Governor Kazuo Ueda's team says it remains committed to the announced path.
The tension has become more sensitive as high energy prices, supply concerns linked to the Strait of Hormuz and a weak yen against the dollar overlap. The government is trying to send measured messages to manage exporter lobbying and the broader rate debate. Markets this week watched Tokyo for policy hints, with the dollar-yen rate volatile.
The BOJ's next policy meeting is due in the coming weeks. It will be critical for the central bank and the government to send aligned messages. Otherwise, additional volatility in Japanese government bond yields and a quicker depreciation of the yen could follow.
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