Abe will delay sales tax until April 2017
- Q3 GDP showed Japan did not return to recovery track
- 3 arrow economic policies showing increasing results
- Have paid attention to individual consumption above all
- Positive economic cycle starting to emerge
No mention of the stimulus package which is all the market wants to hear right now and USD/JPY is showing its disappointment by dropping 60 pips quick smart from around 117 to 116.39. This is the much awaited press conference.
- Raising tax as planned would have made escaping deflation hard
- Cannot abandon plan to restore fiscal health
- Will submit extra budget in parliament next year
- Will not delay sales tax hike again
No mention of the election either yet.
- Japan to dissolve lower house in Nov 21st (not call snap elections as reported on Reuters)
- Wants to check public opinion on delay of sales tax
- Must seek voice of people to proceed with economic program
- Abenomics hasn’t failed
- Must not miss chance to escape deflation
- Will keep FY 2020 fiscal target
- Will resign if coalition doesn’t gain majority
- Loss of majority would be a rejection of Abenomics
I still believe that the market isn’t pricing enough risk into this event.
- Will consider lower tax rates for essentials
Still no mention of what measures he’s going to put into place but one of the biggies will be if he moves on corporate taxes. The issue with Japan is that they are just trying to juggle their finances around. They can’t just cut taxes as a measure to boost the economy as they’ve got to find that money from elsewhere. It’s accounting smoke and mirrors on a huge scale.
