Japanese Finance Minister Katayama says the government is coordinating closely with the BoJ, with no major divergence on the inflation outlook or monetary policy

• Notes that tax cuts boost demand and push up prices.
• Government will ensure proactive and responsible fiscal policy strengthens Japan's supply capacity without accelerating inflation.

Statements affirming coordination between the finance ministry and the BoJ are a recurring feature of Japanese policy cycles and have historically mattered less for what they say than for what they do not: the episodes that moved JGBs and the yen were those where visible divergence, fiscal pressure on the central bank or ministerial discomfort with tightening broke the united front. The explicit denial of major divergence on inflation and policy reads as reassurance aimed at a market primed to test how far the new government tolerates BoJ normalisation, and in past episodes this kind of alignment language has kept front-end pricing anchored to the data rather than to political risk premia. The qualification that fiscal expansion must strengthen supply capacity without accelerating inflation is the operative line; it is the standard formula used when a government wants room to cut taxes while not handing the central bank an argument to accelerate, and its credibility is tested at budget time rather than in comments. The tax-cut admission that demand stimulus pushes up prices cuts the other way and is the tell worth tracking, since acknowledgment of the inflation channel narrows the scope for fiscal loosening without a monetary offset. Worth watching are the next remarks from BoJ officials for any tonal drift away from this script, the shape of the supplementary budget, and whether super-long JGB supply and duration demand absorb the fiscal programme cleanly. As coordination commentary rather than a decision, the signal is status quo preservation.