Japan to Add Footnote in Economic Blueprint Citing Bank of Japan Independence

Japan’s government plans to add a footnote to its revised Basic Policy on Economic and Fiscal Management and Reform, citing legal provisions that guarantee the Bank of Japan’s independence in setting monetary policy. According to Jin10, TV Tokyo reported on Tuesday that the footnote will quote clauses in the law that safeguard the central bank’s autonomy. The report said the final version will call on the Bank of Japan to “appropriately guide monetary policy with the aim of achieving stable price increases,” in order to make clear that the government does not intend to intervene in monetary policy. An earlier draft triggered selling in the yen and Japanese government bonds, as markets interpreted it as a sign that a government led by dovish Japanese Prime Minister Sanae Takaichi could pressure the Bank of Japan to delay interest-rate hikes. A cabinet member involved in drafting the document later acknowledged that the government would revise the wording to ease market concerns. The policy blueprint is the first to be compiled since Takaichi’s government took office, and it is expected to be submitted to a cabinet meeting for approval next week.