Japanese Prime Minister Sanae Takaichi will tell parliament next week that she is ready to respond quickly to any unexpected turn in the economy or financial markets, according to a draft speech reviewed by the Nikkei newspaper. The pledge comes as Japan's benchmark government bond yield heads toward a fifth straight quarter of double-digit gains on concern over the country's finances. Takaichi will also link next year's debt issuance to how interest rates move.
Takaichi is set to make the remarks on the first day of an extraordinary parliamentary session on October 5, the Nikkei reported. She will explain that the government will decide the size of annual debt issuance with an eye on interest-rate developments, according to the paper. According to Reuters: "we will analyse the impact and respond nimbly" is the line Takaichi is expected to deliver on unexpected economic and market moves.
Bond market pressure builds
The administration has ruled out compiling a supplementary budget, but Takaichi will explain how it will respond nimbly depending on conditions, the Nikkei said. Her office was not immediately available to comment. Meanwhile, concern over Japan's worsening finances has sent the benchmark government bond yield on track for a fifth straight quarter of double-digit increases as of Wednesday, as markets react to Takaichi's ambitious spending plans.
A debt ceiling tied to rates
In an interview with the Yomiuri newspaper last month, Takaichi said the government will aim to cap new bond issuance at 40 trillion yen ($255 billion) for next fiscal year's budget. The administration has also pushed back against market views branding its policies as "reflationist," stressing that it was mindful of the need to keep Japan's fiscal house in order.
Source: Investing.com (Reuters)
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