Potential Impact of Trump's Economic Policies on the Yen

TOKYO (Reuters) – U.S. President-elect Donald Trump's economic policies may further weaken the yen against the U.S. dollar, according to Yuichiro Tamaki, the leader of the Democratic Party for the People (DPP). This statement was made during a press conference on Friday.

Economic Concerns

Tamaki highlighted that potential increases in tariffs or tax cuts could lead to inflation in the U.S., resulting in higher interest rates. This scenario poses serious concerns for Japan, especially after the country's general election on October 27, where Tamaki's party gained influence over the ruling Liberal Democratic Party, which recently lost its majority in the lower house.

Effects on Japan

Higher import costs due to inflation could squeeze household budgets in Japan, further undermining public support for Prime Minister Shigeru Ishiba. Tamaki emphasized that the Bank of Japan (BOJ) should wait to raise interest rates until wage growth consistently outpaces inflation.

Current BOJ Policy

The Bank of Japan ended negative interest rates in March and raised short-term rates to 0.25% in July. Tamaki insisted that domestic policies should aim at domestic objectives.