MNI BRIEF: PM Takaichi To Meet BOJ's Ueda At 0630 GMT

Prime Minister Sanae Takaichi will meet Bank of Japan Governor Kazuo Ueda at 0630 GMT on Tuesday, Nikkei reported. 

The two are expected to exchange views on economic and financial developments.

Japan’s economy contracted 0.4% q/q, or an annualised -1.8%, in July-September for the first decline in six quarters, dragged down by weak private consumption, housing investment and net exports, preliminary Cabinet Office data showed Monday.

The yen weakened sharply against the euro on Monday, briefly sinking into the low-JPY180 range in New York for the first time since the euro’s 1999 introduction, pressured by expectations of expansionary fiscal policy in Japan. Japanese government bond yields rose broadly on concern over deteriorating fiscal conditions.

Attention is on how Takaichi, regarded as a fiscal-monetary dove, addresses the possibility of a BOJ rate hike to adjust the degree of monetary easing at the Dec. 18-19 meeting, although the bank is not committed to moving in December.

Takaichi will also begin talks this week on tax changes aimed at stimulating investment and consumption while compensating with increases elsewhere and scrapping certain deductions, Nikkei said. The ruling Liberal Democratic Party will start full-scale discussions on tax reforms for the next fiscal year, while coalition partner Japan Innovation Party will also meet this week.

A central agenda item for the new administration is cutting fuel taxes to ease household burdens. Last month, six ruling and opposition parties agreed to scrap the gas tax surcharge by Dec. 31 and the diesel surcharge by April 1.