Japan’s Economy Minister Says Government Will Not Signal Rate Preferences to Central Bank

Japan’s economy minister said the government would not communicate in advance any preference on how the central bank should set interest rates, seeking to ease market concerns about political interference in monetary policy. According to Jin10, Japan’s Minister of Economy, Trade and Industry, Minoru Kiuchi, said on Friday that the government would never preemptively convey its preferences on how the central bank should set rates. His remarks followed a draft economic blueprint that said it was important to “appropriately guide monetary policy to achieve a stronger economy,” which intensified market worries that Prime Minister Sanae Takaichi’s dovish-leaning government could pressure the Bank of Japan to delay rate hikes. The draft also referenced a legal clause requiring the Bank of Japan to align its policy decisions with the government’s economic agenda, but it did not mention another provision stating the central bank is legally independent from political interference. At a news conference, Kiuchi said the government’s position had not changed and that specific monetary policy tools are decided by the Bank of Japan. He added that the government would not convey its views in advance on the timing and magnitude of rate hikes or the direction of monetary policy. Kiuchi also said the government and the Bank of Japan “clearly should” share an understanding of economic, price, and financial conditions.