Reuters report that a senior Japanese government official has said that the next planned sales tax increase in October 2015 should be knocked back until April 2017. The anonymous official said that there is a growing concern among people close to PM Shinzo Abe about the weakness in the Japanese economy.
The call comes after an Abe advisor, Etsuro Honda, voiced the same call last week and it seems the calls are getting louder for the next sales tax rise to be delayed. We also heard this week how the BOJ are seeing a greater risk that inflation may drop below 1% on lower oil prices. The signs are starting to build that Japan is going to miss it’s inflation target and that the economy is not reacting as it is expected to after all the stimulus and Abe’s grand plans. It was always going to be a very tough job t get the Japanese monster moving and that’s proving to be the case. From the markets perspective the first thought will be to expect extra BOJ pumping but that may not be the answer this time around.
