Economist Suggests Japan May Suspend Food Sales Tax Amid Iran Tensions

Takahide Kiuchi, an economist at Nomura Research Institute, has indicated that rising tensions surrounding Iran could bolster Japanese Prime Minister Sanae Takaichi's proposal to suspend the food sales tax. According to Jin10, this measure aims to counteract potential economic slowdown and inflation driven by increasing oil prices. Kiuchi noted that while reducing the consumption tax might have limitations in swiftly addressing inflation, the government may resort to cash distributions as an immediate support measure for households. He also anticipates that, given the rising economic risks, the Bank of Japan will exercise greater caution regarding further interest rate hikes.