Japan economy minister says he hopes BOJ works closely with government on policy

TOKYO - Japan's Economic Revitalisation Minister Minoru Kiuchi said on Tuesday he hoped the Bank of Japan works closely with the government to durably achieve its 2% inflation target.

Specific monetary policy measures are up to the BOJ to decide, he said, when asked at a press conference on prospects of a near-term interest rate hike.

On recent rises in Japanese government bond (JGB) yields, Kiuchi said they reflect supply-demand dynamics in the market and a moderate economic recovery.

"Rising interest rates affect the economy through various channels, so we will continue to scrutinise rate moves and their effect on the economy," Kiuchi said.

The BOJ is expected to raise its short-term policy rate to 1% from 0.75% at its two-day policy meeting ending on June 16 unless a sharp escalation in the Middle East conflict upends markets, sources have told Reuters.

Bond yields worldwide, Japan included, have risen as investors fret that higher fuel prices from the Middle East conflict could stoke inflation and outpace central bank responses.

Kiuchi is seen as close to reflationist aides of Takaichi, who propose keeping fiscal and monetary policy loose to focus on propping up growth.

(Reporting by Leika Kihara; Editing by Tom Hogue and Shri Navaratnam)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 8, 2026 at 8:04 PM.