Japanese Minister Kiuchi Addresses Inflation Outlook and Fiscal Policy’s Yen Impact

• Japan’s Kiuchi noted limited inflation pass-through to consumers.
• Fiscal policy and spending plans are expected to provide a long-term boost for the yen.
• Government’s inflation view potentially contrasts with BoJ’s more cautious stance.

Japan’s Economy Minister Minoru Kiuchi stated on Tuesday that the full impact of rising costs has not yet been passed through to consumers, despite acknowledging a potential acceleration in consumer inflation later this year. This perspective, which noted June CPI showed moderate price rises, contrasted with the Bank of Japan’s recent more cautious warnings about inflation overshoot risks, potentially signaling less government urgency for policy tightening. Kiuchi emphasized the government’s collaboration with the BoJ to achieve a sustainable 2% inflation target, while also suggesting that proactive fiscal policy and spending plans would be positive for the economy and provide a long-term boost for the yen. He refrained from commenting on specific foreign exchange levels.