Takaichi Demanded BOJ Buy More Government Bonds When Necessary
Claire Weston
Japan's PM Takaichi privately asked BOJ Governor Ueda in May to expand bond purchases if necessary — exposing the government's anxiety over rising long-term rates and putting the BOJ's policy independence directly under market scrutiny.
What exactly did Takaichi tell Ueda?
Jiji Press, citing anonymous sources, reported that Takaichi met Ueda in May and asked the BOJ to increase JGB purchases when needed.
She called for "appropriate measures to stabilize the market" and an expansion of bond buying if conditions required it.
Ueda said the BOJ would need to assess market reactions but would "respond when the situation demands." Publicly, he said only that both sides agreed to stay in close contact.
This means → Ueda did not refuse outright, nor did he commit to action — leaving deliberate ambiguity on both sides.
Why is the government pressing the BOJ to buy?
The BOJ began slowing bond purchases in July 2024, aiming to exit massive stimulus and let the JGB market reprice on its own.
The direct consequence: bond yields rise, and the government's borrowing costs climb with them.
In plain terms = when the BOJ buys less, bond prices fall and rates go up. The government pays more interest on new debt — and Takaichi's cabinet knows the math.
What did the BOJ do next?
In June, the BOJ announced it would pause its tapering plan from next April, holding monthly purchases at roughly ¥2 trillion.
Some analysts read this as partly a response to government pressure.
The same day, the BOJ published a research paper arguing that tapering has a "likely very limited" effect on long-term rates — widely seen as a goodwill signal toward the government.
What does this mean for markets?
The core question is singular: how much monetary-policy independence does the BOJ still have?
If markets conclude the BOJ slowed normalization under political pressure, both yen credibility and JGB pricing come into question.
This reflects a deeper tension — the government needs low rates to manage the world's heaviest public-debt load, while the BOJ is trying to normalize as inflation picks up. That conflict is far from resolved.
Content is for reference only, not financial advice.