Another headline crossing the Bloomberg (earlier one here: Japan’s LDP Kozo Yamamoto calls for delayed tax increase)

This time from Abe adviser Etsuro Honda:

  • Abe adviser calls for delay in sales tax hike to 2017

Citing an interview with Reuters from late yesterday: Japan’s LDP Kozo Yamamoto calls for delayed tax increase

  • An economic adviser to Japanese Prime Minister Shinzo Abe said on Monday that a planned rise in the sales tax should be delayed by a year and half to 2017 because a first increase in April had hit the economy harder than expected
  • Etsuro Honda, University of Shizuoka professor, and a prominent outside architect of Abe’s reflationary policies
  • Said recent weak economic indicators including household spending, factory output and exports made him think the economy was clearly “undershooting” what he had been expecting just a couple of months ago
  • He sees a distinct possibility that the BOJ could ease policy further.
  • “Regardless of the next sales tax hike, it could be that additional monetary easing might be called for if inflation and demand fail to pick up and the output gap doesn’t narrow,” Honda told Reuters in an interview.
  • “I can fully see the possibility that such a situation will occur.”

More detail at the Reuters link (above)

As you would expect, Mike was all over this as it came out: Japanese PM advisor Honda says next sales tax hike needs to be delayed until 2017