Koichi Hamada, an adviser to Prime Minister Shinzo Abe, said that he was cautious about increasing Japan’s sales tax soon, signaling Abe will face debate over the planned move after a forecast election victory this weekend.
This week’s slide in Japanese stocks raises the stakes for Prime Minister Shinzo Abe’s planned revamp of business regulations as officials sought to sustain confidence in efforts to revive the economy.
The yen weakened beyond 100 per dollar for the first time in four years as the Bank of Japan’s deflation-fighting measures have the currency headed for its longest streak of monthly losses in almost two decades.
Election losses by the party of Japanese Prime Minister Naoto Kan over the weekend may delay a debate on whether to raise the sales tax to address the nation’s budget shortfall, according to Dai-Ichi Life Research Institute.
The Bank of Japan faces increased pressure to step up easing in coming weeks as political leadership changes and pessimism among manufacturers fuel calls for more aggressive action to end deflation and revive growth.
The Bank of Japan expanded its asset-purchase program for the third time in four months, and will reconsider its objectives for inflation as incoming Prime Minister Shinzo Abe urges more action to end price declines.