Chief Cabinet Secretary Hiromu Nonaka urged the central bank Monday to step up efforts within the week to stop the rise in interest rates through such means as buying government bonds from the market.
The government's chief spokesman, however, remained cautious about the Bank of Japan underwriting newly issued government bonds as a way to ensure the stability of long-term interest rates, saying the BOJ should first consider buying them from the market. Executives of the BOJ and the Finance Ministry, including Finance Minister Kiichi Miyazawa, have reiterated that the BOJ should not underwrite newly issued government bonds.
There is a growing concern in the financial market that the 31.05 trillion yen worth of new government bonds to be issued in fiscal 1999 may be too much for the market to absorb smoothly.