The prime minister's office was not immediately available to comment on the Yomiuri report, published on Wednesday.
Kiuchi belongs to a group of ruling-party lawmakers who favour big spending and have ties with advocates of policies similar to Abenomics, a mix of aggressive fiscal and monetary stimulus deployed in 2013 by then premier Shinzo Abe.
While also a fan of Abenomics, Takaichi has heeded market concern over her spending plans and recently stressed the need to "simultaneously achieve" both growth and fiscal reform.
She is also set to keep Finance Minister Satsuki Katayama, a former finance ministry bureaucrat seen as holding a more conservative view on fiscal policy, in the cabinet reshuffle.
Still, a reappointment of Kiuchi would be a sign Takaichi will make no major change to her focus on reflating growth, analysts say.
"Kiuchi has been the main figure spearheading Takaichi's 'responsible and proactive' fiscal policy. His reappointment would be seen by markets as a sign the administration's expansionary fiscal policy will be sustained," said Yuhi Kawano, market analyst at Mizuho Securities.
As minister overseeing the Cabinet Office, Kiuchi has the right to attend the Bank of Japan's policy-setting meetings as one of the two government representatives. The finance ministry has the right to send the other government representative.
Kiuchi and Takaichi's reflationist aides have voiced reservations over the BOJ's policy normalisation efforts on concern that higher interest rates could hurt growth and boost the cost of the premier's ambitious spending plans.
When the BOJ raised interest rates in June, Kiuchi said the central bank must be held accountable for the decision and its potential negative impact on the economy, according to minutes of the meeting.
Many analysts, however, expect the administration to avoid explicitly pushing back against the BOJ's rate-hike plans after repeated calls from U.S. Treasury Secretary Scott Bessent for the central bank to raise interest rates.
The BOJ is set to hike interest rates to a 31-year high on Friday and signal readiness to keep pushing up borrowing costs, joining other major central banks in fighting persistent inflation pressures.
In a news conference on Tuesday, Kiuchi said he had some sympathy over proponents of a "high-pressure economy," or a set of policies aimed at keeping demand intentionally higher than supply through loose fiscal and monetary policy.
On monetary policy, he said it was important to strike a balance between the need to respect the BOJ's independence and close government-central bank coordination on economic policy, both stipulated in law.
Kiuchi likely to stay in reshuffle
Japanese Prime Minister Sanae Takaichi is likely to keep her reflationist ally Minoru Kiuchi as economy minister in a cabinet reshuffle on Thursday, the Yomiuri newspaper reported, a sign she has no plans to rein in her big spending plans.
Markets have been focusing on whether Kiuchi, known as an advocate of expansionary fiscal and monetary policy, will retain his post for clues on whether the recent bond selloff could prod Takaichi to water down her big spending plans.
Bond yields rise on fiscal concerns
Concerns about the risk of additional debt issuance to fund Takaichi's expansionary fiscal plans sent the yield on the benchmark 10-year Japanese government bond JP10YTN=JBTC to a three-decade high of 3.025% on Tuesday. The yield rose further to hit 3.035% on Wednesday.
"The current rise in bond yields is driven predominantly by concern over Japan's fiscal outlook, which will only heighten if Kiuchi were to be re-appointed," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
"Unless there's notable change in Takaichi's fiscal policy approach, bond yields will likely keep rising," he said.
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