Japan's Junior Coalition Leader Advocates for Non-Interference in BOJ Policies

By Takaya Yamaguchi and Leika Kihara TOKYO, Feb 16 (Reuters) - Hirofumi Yoshimura, head of the Japan Innovation Party, a junior partner in the ruling coalition, emphasized the importance of the government refraining from interfering in monetary policy. In an interview, he urged a focus on establishing a resilient economy capable of withstanding potential repercussions from future interest rate increases. Yoshimura also highlighted the urgency of enacting a two-year suspension of the 8% sales tax on food to alleviate household burdens from rising living costs and suggested using Japan's substantial foreign exchange reserves as a revenue source. His comments indicate a desire to support economic growth through fiscal measures without exerting pressure on the Bank of Japan (BOJ) to postpone interest rate hikes that could mitigate unfavorable currency fluctuations. Following a significant election victory for Prime Minister Sanae Takaichi on February 8, she reiterated her commitment to the tax suspension, which may create significant revenue gaps and exacerbate Japan's financial challenges. Yoshimura echoed this sentiment, emphasizing the need for timely implementation and consideration of funding through non-tax revenues and reducing wasteful spending. He acknowledged that tapping into Japan's $1.4 trillion foreign currency reserves — a critical resource for potential yen intervention — could be a viable financing option for these initiatives. Furthermore, Yoshimura recognized the complexities of a fluctuating yen, which benefits exporters but raises living costs, and advocated for careful, responsive action from authorities regarding currency market interventions. As of Monday morning, the dollar traded at 152.66 yen, reflecting a notable gain in recent weeks. (Reporting by Takaya Yamaguchi and Leika Kihara; editing by Lincoln Feast.)