Takaichi Asks BOJ to Buy More Bonds Amid Rising Interest Rates

Japanese Prime Minister Sanae Takaichi asked Bank of Japan Governor Kazuo Ueda to buy more government bonds when necessary to curb rising long-term interest rates during a meeting in May. The request was made as part of efforts to stabilize markets, according to unnamed sources cited by the Jiji news agency.

Takaichi reportedly told Ueda that the BOJ needs to take appropriate steps to stabilize markets and increase bond buying if needed. However, Ueda replied that the central bank must consider market reaction to such measures and will respond when circumstances require it.

The BOJ has been gradually slowing its bond-buying program since July 2024, aiming to wean the economy off massive stimulus and breathe life back into a market dominated by the central bank's huge presence. In June, the BOJ decided to suspend the taper process from April next year and continue buying approximately 2 trillion yen ($12.68 billion) in Japanese government bonds each month.

A recent research paper released by the BOJ suggests that its tapering of bond purchases is likely having a limited effect on pushing up long-term interest rates, highlighting the central bank's sensitivity to government concerns.