Japan¡¯s government tweaked a reference to monetary policy in the latest draft of its annual policy agenda in a move likely aimed at reducing market concerns that it is putting pressure on the central bank to go slow on interest rate hikes.
The draft of the government¡¯s economic and fiscal agenda for the coming year adds a reference to inflation, calling for appropriate monetary policy that contributes to stable price increases. That phrase can be interpreted as giving the BOJ scope to raise interest rates to rein in inflation.
An earlier draft of the plan said the ¡°appropriate conduct¡± of monetary policy was ¡°very important,¡± without mentioning inflation, an assertion that some interpreted as a hint meant to dissuade the Bank of Japan from further rate hikes. The updated draft keeps the two references to appropriate policy being very important.
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