It could be difficult for the Bank of Japan to taper its record monetary stimulus before a planned sales-tax hike in 2017, and the government may need to compile a ¥2.5 trillion economic package to cushion the blow to households, an adviser to the prime minister said Tuesday.
Etsuro Honda, who has known Prime Minister Shinzo Abe for three decades and advises him on economic matters, said the government would need to "take a cautious approach" after an increase in the levy last year sparked a recession.
"Fiscal spending of about ¥2.5 trillion will probably be needed to counter the impact," Honda said in an interview at the prime minister's office in Tokyo.