Prime Minister Fumio Kishida appears to be counting on the Bank of Japan to keep borrowing costs near rock-bottom lows as his government paves the way for continued spending even after a record-breaking splurge during the pandemic.
The prime minister, seen as fiscally cautious before he became leader, has signed off on changes to an annual fiscal policy plan that loosen rather than tighten the corset constraining the nation’s spending plans. And this is for an economy that already has the developed world’s largest public debt load.
The government has dropped its reference to a target to balance Japan’s books by the year ending March 2026 and its language on inflation is sounding a lot more aligned with the BOJ as it seeks to achieve price growth "in a stable and sustainable manner.”