Prime Minister Fumio Kishida said on Thursday that the government hopes the central bank keeps up its efforts to reach a 2% inflation target and works closely with it on economic policy.
Before taking office as Prime Minister in October, Kishida warned of the drawbacks of the Bank of Japan's (BoJ) ultra-loose monetary policy, such as the strain that extended low interest rates inflict on bank profitability.
"By ensuring that the BoJ's monetary policy and the government's fiscal policy work hand in hand, Japan's economy can be restored to healthy growth," Kishida said. "That's why it's critical for the two sides to work closely together in terms of coordination and communication."
He stated that developments in the global economy and the COVID-19 pandemic could influence future policy decisions.
"But for the time being, it's critical for the two sides to coordinate policies," Kishida added, referring to an understanding detailed in a joint statement from 2013.
The document clarified the government's and central bank's roles in bringing Japan out of deflation, while also defining the inflation objective for the first time.
In November, Japanese policymakers, including the governor of the Bank of Japan, Haruhiko Kuroda, reaffirmed the promise made in the joint statement.