Bank of Japan Governor Kazuo Ueda on Tuesday emphasized that the central bank will coordinate closely with the government on the Japanese government bond market as long-term interest rates have been climbing at a relatively fast pace.
Addressing reporters following a meeting of Group of Seven finance chiefs and central bankers in Paris, Ueda acknowledged recent upward movement in long-term yields and described the pace of that increase as rapid. He said the BOJ will watch market developments and judge market functionality carefully when asked about the timing or scope of any tapering measures.
Ueda added that, alongside monitoring markets, the BOJ will adopt appropriate monetary policy to achieve its inflation target. The governor underscored the need for vigilance as the central bank assesses signs of upward price pressure.
At the G7 gathering, Ueda said members agreed that rising energy prices are influencing inflation expectations, economic activity and financial markets. He observed that the latest GDP figures are broadly consistent with the BOJ's forecasts but cautioned that the situation in the Middle East has already begun to exert an impact.
The governor's remarks framed the central bank's stance around two priorities: ensuring market functioning in the face of faster-moving long-term rates and maintaining policy commitment to reaching the inflation goal.
Separately, Japanese Finance Minister Katayama told G7 counterparts the group should present a united call for China to refrain from what he described as distorted industrial policy. Katayama also signaled that Japan stands prepared to take decisive action on foreign exchange if necessary.
Taken together, the statements from Japan's finance and central bank leaders point to an active posture toward both market stability and external economic pressures. The BOJ's commitment to coordinating with the government on bond-market developments, and to adjusting policy as needed to meet its inflation target, were the central messages delivered after the Paris meeting.