Japan Finance Chief Pushes Back Against Reflationist Labels for PM Takaichi

Japan's finance chief, Kazumi Katayama, has pushed back against labeling Prime Minister Fumio Takaichi as a 'reflationist', clarifying that the prime minister respects central bank independence and that day-to-day decisions are made by the Bank of Japan. This shift in stance from Takaichi is notable given her mentorship under former Prime Minister Shinzo Abe, who was known for his easy money policies.

Katayama emphasized that the government is not steering BOJ policy, but rather allowing it to make its own decisions. This approach contrasts with previous policies aimed at reflation and boosting growth through flexible budgets.

The recent rate hike by the BOJ was seen as a departure from these reflationist policies, with two board members selected by Takaichi voting against it. The yen is now weaker against the dollar than before the hike, and government bond yields have pushed to highs not seen since the mid-1990s.