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The government must consider the impact of newly issued government bonds on the financial market and is currently studying ways to tackle the problem, Finance Minister Kiichi Miyazawa reiterated Friday.

Responding to a question by Liberal Democratic Party member Michio Ochi at a Lower House Budget Committee session, Miyazawa said he is not very worried about the recent rise in long-term interest rates.

There is a growing concern that the 31.05 trillion yen in new government bonds to be issued in fiscal 1999 may be too much for the market to absorb smoothly, leading to a further rise in long-term interest rates.

Some top government officials, including Chief Cabinet Secretary Hiromu Nonaka, have publicly urged the Bank of Japan to increase its purchase of government bonds from the market as a way to ensure the stability of interest rates, but officials of the BOJ and Finance Ministry remain cautious in doing so.

Although Miyazawa told the Diet session that current interest rate levels are no cause for great concern, he added, “We need to consider the fact that the government will issue a huge amount of government bonds, and I have asked the ministry officials to study the matter.”

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