Japan's Katayama: Need to communicate JGB market before budget compilation

In the Asian trading session on Tuesday, Japan Finance Minister (FM) Satsuki Katayama highlighted the need to communicate to market financial and Japanese Government Bonds (JGBs) markets regarding administration’s intentions towards the fiscal policy stance.

On Monday, Japan Prime Minister (PM) Sanae Takaichi addressed the need for an exit from the excessively tight fiscal policy to spur growth. However, Takaichi confirmed that the government won’t pursue reckless spending. She added that the additional government spending will be funded by expanding Gross Domestic Product (GDP)-driven tax revenue.

Remarks from Japan FM Katayama

Can't comment on source for funding food tax cut beyond what PM said yesterday.

Important to communicate with markets on process of compiling budget.

Must communicate with JGB market in run up to budget compilation, we hadn't done that.

Monetary policy is part of economic policy, as stated in BoJ act.

Believe government's relationship with BoJ has been smooth.

Economic blueprint draft dropped out some consideration of history on BoJ-government relationship, as our desire for proactive fiscal policy has come to forefront.

Very good that final version of economic blueprint has won market understanding.

Weak Yen have both merits, demerits.

Won't comment on potential intervention.

No change in our stance that we're ready to respond on forex as needed.

US, Japan both share this stance on Forex.

GPIF portfolio is far short on alternative investments.

My remarks on GPIF portfolio were meant that households should benefit from economy to be boosted by growth strategy.

Market reaction

A slight buying interest was seen in the Japanese Yen (JPY) following remarks from Japan FM Katayama. At press time, USD/JPY trades almost flat at around 163.73.