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Japan prepares "$181B" stimulus package

  • Japan has reportedly been putting together an ¥18.6T ($181B) stimulus package to offset the impact of a rise in sales tax that is due to take place in April.
  • The government will use tax revenue to finance the spending and forgo raising new debt.
  • The proposals include ¥5.5T in fiscal spending, local-government investments, and ¥10T in loans to small- and medium-sized businesses.
  • The package will add to a ¥20T yen plan that Prime Minister Shinzo Abe unveiled earlier this year. The headline figure of the latest program may include spending that's already been committed - as is often the case in Japan - so actual new investment may be smaller.
  • Meanwhile, Bank of Japan board member Takehiro Sato said that he doesn't see the need to increase the BOJ's monetary stimulus to counter the effect of the VAT hike, and that loosening policy further may even be harmful.
  • Sato's comments come amid speculation that the bank could boost its stimulus next year, which helped the Nikkei close at a six-year high yesterday.
  • Today, though, the index is -2.15%, while the yen is flat at 102.55.
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