BOJ Told to Buy More Bonds Amid Rising Interest Rates Concerns

Japanese Prime Minister Sanae Takaichi met with Bank of Japan Governor Kazuo Ueda in May and asked him to buy more government bonds when necessary, according to Jiji news agency. The request was made during a meeting where the prime minister called on the BOJ to take 'appropriate steps to stabilise markets' and increase bond buying if needed.

Ueda reportedly replied that the BOJ needs to consider the market reaction to such measures, but that the central bank will respond when circumstances require. The BOJ has been slowing its bond buying since July 2024 to wean the economy off massive stimulus, but suspended the taper process from April next year and kept buying roughly 2 trillion yen ($12.68 billion) in Japanese government bonds (JGB) each month.

Ueda told reporters after the meeting with Takaichi that he had agreed to communicate closely with the prime minister on monetary policy. The BOJ released a research paper on Tuesday saying its tapering of bond purchases is probably having only a limited effect in pushing up long-term interest rates.