Japanese Prime Minister Takaichi said she accepts the Bank of Japan’s recent
rate hike and reiterated the need for close government–BoJ coordination on
monetary policy. She said the government expects the central bank to act in line
with economic, price and financial developments to sustainably achieve a 2%
price-stability target. May nationwide CPI rose 1.4% YoY, partly held down by
state aid capping energy costs. Takaichi’s administration has prepared a
supplementary budget to cushion households from the Middle East shock in coming
months. The BoJ expects conflict-driven higher energy prices to add notable
upside to inflation, lifting economists’ odds of another BoJ hike this year,
possibly as early as September.
