The leader of one of Japan¡¯s smaller opposition parties has said that while a deficit in the primary balance is acceptable in the near term, the government should present a five-year road map toward achieving a surplus by around 2030 as interest rates are poised to rise.
¡°While it is acceptable for the primary balance to remain in a deficit for the time being, it is necessary to present a roughly five-year path toward achieving a surplus around 2030 in a way that the bond market finds credible,¡± Yuichiro Tamaki, leader of the Democratic Party for the People, said in an interview Friday.
He added that while broader monetary policy should move toward normalization, raising rates should be done carefully with a close eye on the impact of the war in Iran.
The comments come as market expectations for a Bank of Japan rate hike on April 28 have receded due to high uncertainty surrounding the impact of the conflict in the Middle East. The government has released stockpiled oil and is seeking to diversify its oil sources in an attempt to counter the economic blow from tensions in the Hormuz Strait, but polls show a majority of people remain concerned over the impact.
Tamaki said he believed Japan should restart its nuclear reactors and build an energy supply chain that doesn¡¯t rely as much on Middle Eastern oil, without giving specifics on what such an energy mix might look like.
Last year, Tamaki¡¯s name was floated as a possible contender for the prime minister¡¯s post before Prime Minister Sanae Takaichi sealed a deal with a separate opposition party to consolidate her power. The ruling bloc holds a comfortable majority in the Lower House but is still short of a majority in the Upper House, giving Tamaki some sway on issues such as constitutional revision.
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