TOKYO: Japan will strive to maintain market confidence by conducting responsible debt management, Finance Minister Shunichi Suzuki said on Tuesday, as 10-year government bond yields broke above the upper cap of 0.5% set by the central bank.

Asked whether the Bank of Japan (BOJ) should take any steps to rein in rising bond yields and correct market distortions, Suzuki told reporters that such a decision must be left up to the central bank to make as an independent institution.

Speculation is rife in financial markets that the BOJ will take further steps to address rising bond yields at its two-day policy-setting meeting, which ends on Wednesday. It surprised markets last month by widening the 10-year yield cap.

“Government bond yields are set by various factors in the market,” Suzuki said, adding that Japan must stick to fiscal discipline to maintain confidence in medium- to long-term fiscal sustainability.

“Rises in bond yields could push up interest payments on Japan’s debt that tops twice the size of its GDP, squeezing policy-related outlays and making Japan’s finances inflexible,” he said.

When asked about next BOJ governor, who will replace incumbent Haruhiko Kuroda when his term ends on April 8, Suzuki said the government would carefully consider conditions at the time in choosing the most appropriate person.

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“The government will firmly proceed with steps to choose a person perceived to be the best, who can win parliament approval,” Suzuki said.

“I expect the BOJ to conduct monetary policy appropriately while taking the economy, prices and financial conditions into account” under whomever becomes new BOJ governor, he added.