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Japan PM urges exit from fiscal tightness as growth prospects improve

She said higher spending would be funded by GDP-driven tax revenue, and pointed to Japan’s 1.7% inflation and wage outlook as signs the economy is picking up.

Reported · Written up by our desk · Central Banks

Japan Prime Minister Sanae Takaichi said Japan needs to exit from excessively tight fiscal policy, arguing that the economy should move toward a growth path supported by greater domestic investment. She also said the government would not pursue reckless fiscal spending, noting that any increase in expenditure would be backed by expanding GDP-driven tax revenue, according to FXStreet.

Takaichi cited Japan’s inflation rate of 1.7%, described as the lowest among G7 countries, and referenced improving wage outlooks. She said Japan could lose the chance to grow if it postpones investment for the future.

The prime minister also said Japan plans to submit a bill to lower an 8% sales tax on food once lawmakers reach agreement on debating the measure. FXStreet reported that there was no major immediate impact on the Japanese yen after her remarks, with USD/JPY trading about 0.15% lower near 163.60 at press time.

Latest closeUSD/JPY 163.79 ▲0.4%

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