Takaichi Urges BOJ to Buy Bonds Amid Rising Interest Rates

Japanese Prime Minister Sanae Takaichi urged Bank of Japan Governor Kazuo Ueda to buy Japanese government bonds if necessary during a meeting in May. The request reflected concerns that increased government borrowing for crisis preparedness investments and higher defense spending could push long-term borrowing costs higher.

Takaichi's request was made on May 22 at the Prime Minister's Office, where she asked Ueda to ensure monetary policy aligned with her government's economic agenda. Ueda responded that any action would depend on market conditions, stating that the BOJ would respond if necessary.

The meeting took place as Japan's debt-to-GDP ratio stood at 248.7%, the highest in the world. The Bank of Japan raised its policy rate from 0.75% to 1% three weeks later, and announced it would stop reducing bond purchases from April 2027 while reiterating its readiness to step in if bond yields spiked.

The BOJ maintained that its June policy decision was unrelated to the meeting, though one government official described it as a 'trade-off' between the rate hike and changes to the bond-buying plan. The US Treasury joined Japan's Ministry of Finance in a coordinated yen-buying operation to counter excessive volatility and disorderly movements in the currency.