Finance Minister Shunichi Suzuki said Tuesday it is up to the Bank of Japan to decide what policy steps it takes after its governor's remarks signaling an end to the central bank's negative interest rate policy caused government bond yields to climb.
While Suzuki refrained from commenting on BOJ Governor Kazuo Ueda's comments made in an interview with a major Japanese newspaper, he stressed the need for the BOJ to work with the government in guiding monetary policy.
"It is up to the BOJ to decide what specific steps it will take," Suzuki told a press conference after a Cabinet meeting.
"We expect the BOJ to coordinate closely with the government and guide monetary policy appropriately based on economic, price and financial conditions so (the bank's) inflation target can be achieved in a sustainable and stable manner," he said.
The BOJ has retained its yield cap program to depress borrowing costs and support the economy. While short-term interest rates remain at minus 0.1 percent, it decided in July to allow 10-year Japanese government bond yields to rise above 0.5 percent toward 1.0 percent, partly to brace for upside risks to inflation.
The benchmark yield has been rising since Ueda told the Yomiuri Shimbun that there are "various options," including ending the negative rate policy if the BOJ becomes confident that it has achieved its 2 percent inflation goal, accompanied by rising wages.
The benchmark 10-year yield hit a more than nine-year high of 0.720 percent on Tuesday.
Higher yields would mean more debt-servicing costs for the government after years of powerful monetary easing have helped limit interest payments and debt redemptions.
The BOJ has underscored the need to persist with monetary easing as the inflation rate, which has remained above 2 percent for some time, is expected to undershoot that target in coming months. It also wants to see sustained wage growth.
