Takaichi finalizes first economic blueprint

Japanese Prime Minister Sanae Takaichi finalized her first economic blueprint on July 21, 2026, vowing to boost investment in strategic areas with combined public and private investment projected to exceed 370 trillion yen through fiscal 2040. The blueprint was overshadowed by rising bond yields, reflecting market concerns that the government could meddle in monetary policy. The administration was forced to revise the blueprint's language on monetary policy several times after an early draft calling for policy 'that bolsters private demand' and a later version tying policy to government growth efforts jolted markets. The final version retained language urging the Japan — Bank of Japan (BOJ) to align its policy with the government but inserted a footnote protecting BOJ independence. Takaichi, a proponent of Abenomics, has signaled reservations about BOJ interest rate hikes, while the BOJ has hiked rates several times since exiting its stimulus program in 2024. The yield on the 10-year Japanese government bond hit a three-decade high of 2.9% on July 9 before retreating to 2.73% on Tuesday. Analysts expressed skepticism that language tweaks would alleviate market concerns.