On the 30th, Prime Minister Fumio Kishida directed the government to formulate economic measures in response to rising prices and a weaker yen. While ruling party officials are calling for at least 30 trillion yen, the market is vocal that the UK, whose currency, government bonds and stocks have plunged following the announcement big tax cut, is “fire on the other side. from the river.”
As for the size of the economic measures, Koichi Hagiuda, chairman of the Liberal Democratic Party’s Policy Research Council, and Hiroshige Seko, secretary general of the House of Councillors, have called for a scale of 30 trillion yen. he said,
Atsushi Takeda, chief economist at the Itochu Research Institute, said risks of fiscal expansion lead to a crash in government bond prices. We need effective policies that eliminate fiscal waste, and he criticized the scale competition, saying, “They either don’t see the chaos in Britain at all, or only see it as a fire on the other side. . an extremely insensitive move.”
Hideo Kumano, chief economist at the Dai-ichi Life Research Institute, also expressed concern that, like the United Kingdom, where the pound sold off due to the announcement of a tax cut that lacked financial resources, “there is a risk that the Yen will continue to depreciate in Japan.” He says he should “learn from England” like a stone from other mountains.
Dark September
UK asset values have fallen since Liz Truss became prime minister
Source: Bloomberg
In the UK, the Bank of England (Central Bank of England) is proceeding with a rapid increase in interest rates to curb prices, which have risen to five times the 2% inflation target (yen)launch economic measures. The pound, British bonds, and British stocks suffered a “triple dip” as fears spread that the government could not afford the debt, fueling inflation.
Prime Minister Kishida plans to draw up a supplementary budget after formulating comprehensive economic measures by the end of October and submit it to an extraordinary session of the Diet. The three areas of focus are responding to high prices and the weak yen, structural wage increases, and investments and reforms for growth.
Haruhiko Kuroda, the Governor of the Bank of Japan, has shown a negative view of raising interest rates because Japan is experiencing cost-push inflation, and rising prices could force a change in monetary policy.
With government debt exceeding 1,000 trillion yen, a 1% increase in interest rates will ultimately increase interest payments by 10 trillion yen. Japan, which has benefited from curbing interest payments under the Bank of Japan’s very low interest rate policy, needs fiscal consolidation in anticipation of rising interest rates.
Keiji Kanda, senior economist at the Daiwa Research Institute, warned, “There is no sense of tension in Japan today as there is in Britain, but the situation may change in a few years.”
