Japan Panel Calls for Government-BOJ Coordination Amid Interest Rate Concerns

A panel of private-sector participants on Japan's premier economic advisory body has called for closer coordination between the government and the Bank of Japan (BOJ) on monetary policy, while emphasizing the need to respect the central bank's independence.

The proposals were made by four members of the Council on Economic and Fiscal Policy (CEFP), which includes economy-related ministers and the BOJ governor. The private-sector members stressed that fiscal policy alone cannot account for the recent climb in long-term interest rates, citing multiple factors such as monetary policy, inflation expectations, and overseas markets.

The government has taken steps to improve communication with markets, including meeting with bond-market participants from over 20 securities firms, banks, and asset managers. Prime Minister Sanae Takaichi has committed to maintaining confidence in Japan's finances through better communication.