Japan economy minister Kiuchi defends government's fiscal policy path

Japan's economy minister Kiuchi defended the government's fiscal policy, stating that the Takaichi administration is following a responsible and proactive fiscal approach without reckless spending. He noted that fiscal policy alone does not determine market developments, as forex rates and long-term interest rates are influenced by multiple factors. Kiuchi emphasized the importance of sustainable wage growth to prevent a return to deflation, but he also acknowledged that an exit from deflation cannot be declared at this stage. This positions his remarks as a subtle critique of the Bank of Japan, which is looking to raise interest rates, conflicting with the government's expansionary policy. Currently, USD/JPY stands at 158.84, up 0.4%, moving towards testing one-year highs. As the pair approaches the critical 160.00 level, discussions about potential intervention are likely to resurface.