The Japanese government is reportedly supporting the Bank of Japan in accelerating the pace of interest rate hikes.

According to informed sources, the government led by Japanese Prime Minister Sanae Takaichi supports a recent interest rate hike by the Bank of Japan, with the next rate increase likely occurring in September or October. The sources added that the central bank is concerned about the depreciation of the yen driving up prices, while the government hopes to strengthen the effectiveness of recent US-Japan currency interventions. Both parties have reached a consensus on the necessity of a short-term rate increase. The Bank of Japan enjoys statutory independence in its monetary policy but also needs to maintain close communication with the government about economic policy objectives. The Takaichi cabinet cannot force the Bank of Japan to set a specific interest rate but can send signals to influence its decisions. The Prime Minister's Office stated in an email declaration, "We believe that specific monetary policy measures, including interest rate hikes, should be decided by the Bank of Japan." The statement also mentioned that the central bank should closely cooperate with the government to achieve the 2% inflation target "in a stable manner." The Bank of Japan declined to comment on this.