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By Takaya Yamaguchi and Tetsushi Kajimoto
TOKYO (Reuters) – Japan is unlikely to raise interest rates to stem the recent sharp declines in the yen to a 24-year low, and still implement additional fiscal stimulus to ease the emerging currency’s pain. Life charge caused by currency weakness, the country’s opposition leader said. says the party.
A rate hike in Japan would do more harm than good, Yuichiro Tamaki, head of the People’s Democratic Party, told Reuters, noting that the yen’s weakness is largely due to the emerging U. S. dollar.
“The dollar wins against all currencies. Even if the Bank of Japan were to raise rates, it would not prevent the yen from weakening, but it would hurt the Japanese economy,” he said.
“We want to mobilize fiscal spending to strengthen the economy,” said Tamaki, a former finance ministry bureaucrat familiar with financial and financial policies.
Although her opposition party has a small number of seats, Tamaki is smart in the financial policy debate and occasionally questions Bank of Japan Governor Haruhiko Kuroda in parliamentary sessions.
Opposition complaints about the government’s stimulus policy and its effects, namely rising prices of everything from food to fuel, are expected to gain public traction as a new parliamentary consultation is expected to be held next month.
The opposition has proposed countermeasures: fiscal stimulus.
His party is calling for an emergency stimulus package worth 23 trillion yen ($160. 44 billion), focused on 100,000 yen bills in line with the user with the aim of driving entry into more sustainable economic growth.
Tamaki also suggested to the BOJ to raise the nominal wage expansion from 2% to its 2% inflation target stipulated in a joint agreement between the government and the BOJ published in 2013.
Joint inflation targets of 2% as a key target for the central bank. However, a combination of tepid wages and emerging living prices are holding back real incomes, hurting purchasing power and household consumption, which accounts for more than a portion of the economy.
“We want it to be transparent to the public which indicator will be used for the 2% target,” Tamaki added.
His party has proposed converting some 500 trillion yen ($3. 49 trillion) of public debt held through the BOJ into “perpetual bonds” for the government to finance its large debt.
In 2018, Tamaki and like-minded lawmakers proposed a law urging the BOJ to explain an exit strategy from its large financial stimulus and it is not easy for the government to carry out fiscal reform, saying the stimulus policy is stalled.
($1 = 143. 3600 yen)
(Reporting through Takaya Yamaguchi and Tetsushi Kajimoto; Editing via Kim Coghill)