Japan PM vows action on yen and rising inflation

Japanese Prime Minister Sanae Takaichi has pledged to closely monitor movements in the yen and rising prices, saying the government will take appropriate action to protect the economy.

Speaking in parliament on Friday, Takaichi responded to concerns about Japan’s economic outlook and the possible impact of a weaker yen. She said the government would carefully assess exchange-rate movements and price changes before deciding on any necessary measures.

The prime minister also said the government would shape its fiscal policy after considering several economic factors, including interest rates and fluctuations in the yen. Her remarks come as financial markets closely watch Japan’s economic policies and the government’s approach to inflation.

A weaker yen can increase the cost of imported goods, including energy and food. This can put additional pressure on households and businesses, particularly when international prices remain high.

Takaichi’s latest comments follow her statement in parliament on Thursday that Japan no longer needed reflationary policies designed to stimulate prices and economic activity. She said the country was no longer experiencing deflation, a situation in which prices generally decline over time.

The prime minister also reaffirmed that her government respects the independence of the Bank of Japan in setting monetary policy. Her remarks suggest that the administration will not oppose the central bank if it decides to raise interest rates further.

Takaichi was previously known for supporting loose fiscal and monetary policies to encourage economic growth. However, her government is now facing pressure from financial markets as concerns grow over Japan’s public finances and rising inflation.

Investors have become increasingly cautious about the country’s economic outlook. Concerns over government finances and price increases have contributed to pressure on the yen and Japanese government bonds.

The government’s response will be closely watched as policymakers seek to balance economic growth, price stability and financial market confidence.