Japan revises economic blueprint language on BOJ policy

The Japanese government is revising the language on monetary policy in its upcoming economic blueprint, seeking to clarify its stance amid market concerns that it is pressuring the central bank to keep interest rates low. The move comes as bond yields have surged to multi-decade highs, reflecting investor anxiety over the administration's expansive fiscal plans and its perceived influence over the Bank of Japan.

A draft of the Basic Policy on Economic and Fiscal Management and Reform, released in June, included language urging the central bank to align its policy decisions with the government's economic agenda. This sparked a selloff in Japanese government bonds, with the yield on the 10-year bond reaching a 30-year high of 2.83 percent on Monday. Investors feared the wording signaled a desire to restrain interest rate hikes, potentially compromising the Bank of Japan's independence and worsening Japan's massive public debt burden.

In response, the government has prepared a revised draft that adjusts the phrasing to emphasize the importance of the central bank conducting appropriate monetary policy to achieve stable inflation. The new draft was submitted to ruling coalition...