Japan’s opposition calls for fiscal stimulus, not rate hikes, to deal with weaker yen

TOKYO: Japan should not raise interest rates to stem the recent sharp depreciation of the yen to a 24-year low, but instead offer more fiscal stimulus to ease the pain of rising costs of living caused by currency depreciation. should be taken, said the opposition leader.

Yuichiro Tamaki, leader of the Democratic Party for the People, told Reuters news agency that Japan’s interest rate hike would do more harm than good, pointing out that the yen’s depreciation was largely caused by the strong US dollar.

“The dollar is rising against all currencies. Even if the Bank of Japan raises interest rates, it will not stop the yen from depreciating and will hurt the Japanese economy,” he said.

“Fiscal spending must be steadily mobilized to strengthen the economy,” said Tamaki, a former finance ministry bureaucrat well versed in monetary and currency policy.

Although the opposition has few seats, Mr. Tamaki is an adept at debating monetary policy and occasionally criticizes Bank of Japan Governor Haruhiko Kuroda in parliament.

Opposition criticism of the government’s stimulus package and its side effects — rising costs of everything from food to fuel — is likely to attract public attention as an additional parliamentary session is due to convene next month.

Opposition parties have launched countermeasures. It’s a fiscal stimulus.

His party aims to stimulate consumption to achieve more sustained economic growth, worth ¥23 trillion ($160.44 billion), centered on cash payments of ¥100,000 per person. calls for an emergency stimulus package to

Tamaki also asked the Bank of Japan to add 2% nominal wage growth to the 2% inflation target set out in a joint agreement between the government and the BOJ issued in 2013.

The joint statement targets 2% inflation as the central bank’s main target. However, low wages and rising costs of living combine to constrain real incomes, hurting the purchasing power and consumption of households, which comprise more than half of the economy.

Tamaki added, “We need to explain to the public in an easy-to-understand manner which indicator should be used for the 2% target.”

His party is proposing turning some of the roughly 500 trillion yen ($3.49 trillion) of government debt held by the Bank of Japan into “perpetual bonds” to help the government finance its huge debt burden. .

In 2018, Tamaki and like-minded lawmakers urged the Bank of Japan to clarify its exit strategy from a massive monetary stimulus and proposed a bill to call on the government to push ahead with fiscal reforms, saying that the stimulus would He said he was stuck.

(1 dollar = 143.3600 yen)