US economist worried over Takaichi's fiscal policy
A US economist expressed concern Thursday that Japan may experience financial market turmoil if Sanae Takaichi, leader of the country's ruling Liberal Democratic Party, becomes prime minister and promotes an aggressive fiscal policy.
Sharing his views with reporters, Adam Posen, president of the Peterson Institute for International Economics, noted that the British pound plunged in 2022 following the announcement of massive tax cuts by then British Prime Minister Liz Truss.
"I doubt that the LDP...will be deterred" from actions that could lead to market turmoil resembling a "Truss moment," he said.
The economist predicted that if Takaichi, who was elected LDP president earlier this month, takes office as prime minister, she will draw up a fiscally expansionary supplementary budget for fiscal 2025 by the end of the year and prevent the Bank of Japan from raising its policy interest rate.
"We'll start to see a big impact" in Japan around next April when the government's budget for the next fiscal year is expected to be passed, he warned.
[Copyright The Jiji Press, Ltd.]
