Japanese Prime Minister Sanae Takaichi has strongly rejected claims that her administration is responsible for a weak currency and elevated borrowing costs, pushing back against persistent market criticism during a parliamentary session on Monday.
Addressing lawmakers, the prime minister defended her economic record and stated that her government’s primary objectives are restoring confidence in the yen through robust economic growth and achieving long-term fiscal sustainability. She also committed to appropriately controlling the issuance of Japanese government bonds in the upcoming fiscal year’s budget.
The premier’s defensive remarks arrive as her year-old administration attempts to soothe ongoing market unease regarding its fiscal policies. Earlier in the year, initial drafts of an annual economic policy blueprint sparked investor anxiety by suggesting a potential shift toward a more expansionary fiscal stance. That perception drove the yen downward against the dollar and pushed long-term sovereign debt yields higher.
Efforts to distance the government from aggressive monetary easing have been echoed by other senior officials. Growth Strategy Minister Minoru Kiuchi stated in September that Japan no longer requires a reflationary policy reliant on aggressive fiscal spending and monetary easing. Takaichi herself echoed those sentiments earlier this month, while Finance Minister Satsuki Katayama has explicitly noted that the prime minister is not a reflationist—a label long attached to Takaichi’s political career.
Despite these assurances, market participants remain focused on how the government plans to finance major policy initiatives, including a planned sales tax cut on food and increased defense spending, without compounding the nation’s substantial debt burden.
Appearing alongside the prime minister in parliament, Bank of Japan Governor Kazuo Ueda provided an update on domestic price trends, noting that underlying inflation is climbing very close to the central bank’s targeted 2% threshold. Ueda also cautioned that long-term bond yields could increase if financial markets perceive that the central bank is failing to raise the benchmark policy interest rate at a sufficient pace.
