By Tamiyuki Kihara and Yoshifumi Takemoto
TOKYO, July 9 (Reuters) – Japan’s government plans to add an explicit reference to Bank of Japan independence in its economic blueprint after concerns over political interference in monetary policy helped push bond yields to multi-decade highs, a source familiar with the matter said on Thursday.
The reference will be added in a footnote citing an article of the BOJ Act stating that the central bank’s autonomy over currency and monetary control must be respected, the source said, declining to be identified because the matter is private.
The move is intended to reassure markets that the government is not seeking to influence monetary policy.
Concerns about central bank independence intensified after a draft of the economic blueprint released last month said it was “very important for monetary policy to be guided appropriately to achieve a stronger economy”.
The government later revised the wording to emphasise the importance of the BOJ conducting appropriate monetary policy “to achieve stable inflation” as Japan seeks to strengthen its economy, according to the revised version of the blueprint obtained by Reuters on Tuesday.
The revised language failed to calm markets, however, with the benchmark 10-year Japanese government bond yield hitting a 30-year high on Thursday.
Kyodo News, which first reported the latest planned revision, said the additional reference was designed to make clear that the government has no intention of intervening in monetary policy.
The source said the reference to BOJ independence did not signal any change in government policy. “It is purely a response to market concerns,” the source added.
Japan’s law grants the central bank operational independence while requiring it to coordinate with the government’s economic policy.
The government plans to finalise the economic blueprint as early as next week.
(Reporting by Tamiyuki Kihara, Yoshifumi Takemoto, Kiyoshi Takenaka. Writing by Makiko Yamazaki. Editing by Chizu Nomiyama and Mark Potter)
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