Japanese Prime Minister's Advisory Panel Expresses Concerns Over Yen's Depreciation's Impact on Households and Economy
Via: Reuters
Lead:
Japanese Prime Minister Fumio Kishida's advisory panel urges the government and Bank of Japan to monitor the impact of yen's depreciation, due to growing concerns about a weak yen pushing up households' cost of living.
Summary:
The advisory panel of Japanese Prime Minister Fumio Kishida's growth strategy has expressed growing concerns about the impact of the yen's depreciation on households' cost of living. The panel has called for the government and the Bank of Japan to be vigilant and work closely together to achieve the 2% inflation target in a sustainable and stable manner through flexible policy management. The weakening yen has become a headache for Kishida's administration as the decline in the currency's value has led to an increase in the cost of living for households, particularly through the inflationary effects on imported food and fuel prices.
The panel's draft action plan on Kishida's "new capitalism" program of driving growth emphasizes the need for both the government and the Bank of Japan to closely monitor the impact of the yen's depreciation on prices. The panel suggests that this impact will eventually be reflected in inflation over the next six months to a year, indicating the urgent need for proactive measures to manage the situation. The weak yen's impact has also figured in a draft of this year's long-term economic policy roadmap, keeping the BOJ under pressure to raise interest rates or slow its huge bond buying.
The connection between the yen's depreciation and climate change lies in the indirect effects on the environment. As the yen weakens, the cost of imported goods, including food and fuel, increases. This, in turn, leads to higher prices for essential commodities, potentially impacting households' purchasing power and their ability to invest in sustainable and environmentally friendly options. Additionally, rising inflation can contribute to economic instability, making it more challenging for governments to allocate funds towards climate change mitigation and adaptation efforts.
The story sheds light on the complex challenges faced by policymakers in managing currency fluctuations, balancing economic growth with inflation control, and ensuring sustainable practices in the face of climate change. The urgency to address these issues stems from the potential adverse effects on households, the economy, and the ability to tackle environmental challenges effectively.
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Concerns grow over yen's depreciation and its impact on Japan's households, economy, and climate change efforts. Find out why it matters via @Reuters: https://www.reuters.com/markets/currencies/japan-growth-strategy-panel-calls-vigilance-weak-yen-impact-2024-06-07/
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