Japan PM Sanae Takaichi's growth plan faces market and BOJ pressure

Prime Minister Sanae Takaichi is pushing a draft growth strategy that envisions about ¥370 trillion of public and private investment by fiscal 2040 in sectors such as artificial intelligence, semiconductors, shipbuilding, energy and quantum technology. The government is revising the language of the plan to stress the Bank of Japan’s mandate to achieve price stability while still indicating coordination with the administration, a move intended to calm markets.

Investors reacted sharply, with the 10‑year Japanese government bond yield climbing to roughly 2.865 %, the highest level in three years. Critics argue the plan risks fiscal discipline and threatens the BOJ’s independence. Economy Minister Minoru Kiuchi denied any pressure on the central bank. The strategy aims to boost Japan’s economic and geopolitical standing, particularly against China, but financing the programme and its impact on households amid a weak yen and higher import prices remain contentious issues.