Japan’s unfunded food sales tax cut and household handouts draw criticism, undermining confidence in the yen despite recent FX intervention.
Japan’s cabinet approved a JPY 4 trillion annual food sales tax cut and household handouts to ease living costs, but markets question the funding plan. The measures, costing 0.6% of GDP, lack specified revenue offsets, drawing opposition and investor skepticism.
Finance Minister Katayama ruled out deficit financing, while PM Takaichi called the measures temporary. However, critics argue they fail to address structural growth issues, leaving the yen vulnerable after a brief post-intervention rally below 156 USD/JPY.
The yen has since weakened, with a 30-year bond auction showing limited concern. Analysts warn the currency remains at risk without sustained policy support.