Japanese Finance Minister Taro Aso told reporters in Tokyo Tuesday that he hoped that the BOJ would continue its efforts to achieve a 2 percent inflation target while leaving monetary policy measures as they are.
Analysts believe that along with an acceleration in monetary expansion by Governor Haruhiko Kuroda and his colleagues, the government will enact the stimulus package as early as October.
Kuroda said that the government has yet to decide on the size of its fiscal program but there is speculation that the so-called supplementary budget package will be decided at the next BOJ meeting on July 29th with the final decision on the size taken on August 2nd.
A recent report in the Nikkei newspaper indicated that the fiscal plan would include 6 trillion yen ($57 billion) of new spending, although only about 2 trillion yen of that would be in a supplementary budget to be passed this year with supplementary spending of about 3 trillion yen ($28.5 billion) for the current fiscal year. Including loans and loan guarantees, the headline figure for the fiscal stimulus has been speculated at 20 trillion yen.
Following his ruling coalition victory in the upper-house election on July 10, Prime Minister Shinzo Abe ordered that a stimulus package be assembled with a focus on improvement in regional infrastructure such as bringing forward the construction of maglev and other high-speed train lines and improving facilities at ports for tourist cruise ships.
Topix Up 8% Since Election
As a result of speculation about the stimulus plans, since the upper-house election, Japan’s Topix index was up 8 percent. During his campaign Abe pledged to work toward raising Japan’s gross domestic product to 600 trillion yen from 500 trillion yen and a well-defined program could help enhance economic growth.
According to one economist, the stimulus package is likely to win approval in the parliament sometime in October, with money starting to flow from late 2016, into 2017.