Japan's PM expresses concerns over further interest rate hikes

Japanese Prime Minister Sanae Takaichi expressed reservations about additional interest rate hikes during her meeting with Bank of Japan (BoJ) Governor Kazuo Ueda last week, The Mainichi daily reported on Tuesday, citing multiple unnamed sources.

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The report, if true, signals potential friction over monetary policy that could complicate the BoJ’s timetable as coordination with the newly strengthened administration becomes more delicate. The yen weakened against both the dollar and euro in response to the report. Ueda had characterized the meeting last Monday as a general exchange of views on economic and financial developments, and had said the prime minister had not made any specific monetary policy requests.

Takaichi herself has been coy about the particulars of their meeting, saying only that she hoped the central bank would work closely with the government to durably achieve its 2% inflation target accompanied by wage gains.

The BoJ declined to comment.

Japanese Economic Revitalisation Minister Minoru Kiuchi also declined to comment on the meeting at a press conference on Tuesday, but reiterated his hope that the BoJ would work closely with the government.

The meeting was held amid simmering market speculation that the rising cost of living, driven in part by the weak yen, could prompt the central bank to raise interest rates as soon as March or April.