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Japanese economy minister Nishimura has crossed the wires and said that it is too “premature to consider fiscal, monetary steps aimed at stimulating consumption as Japan is still focusing on containing coronavirus pandemic.”

Japan shouldn’t think about fiscal reform now, future tax hikes not on my mind.

Market implications

Prime Minister Shinzo Abe has already doubled Japan’s stimulus measures, delivering on his bold promise to keep businesses and households afloat with the world’s biggest virus-response package.

A 117 trillion yen ($1.1 trillion) set of measures were approved by his cabinet last month which includes financing help for struggling companies, subsidies to help firms pay rent and several trillion yen for health care assistance and support for local economies.

The spending will be funded by a second supplementary budget that breaks a record for an extra budget set only in April.

  • Japan’s GDP Q1, QoQ: -0.6% vs -0.5% expected, yen stable

The full force of virus damage has yet to show up in Japan’s GDP data, yet analysts see GDP shrinking by more than 20% this quarter and say the recovery could be slow as exports, tourism and business investment struggle to rebound.

  • USD/JPY recedes to 109.50 on USD selling, Japan’s Q1 GDP revised higher