Economy

Japan’s political kingmaker says Trump policies may weaken yen

TOKYO (Reuters) – U.S. President-elect Donald Trump’s economic and policies could further weaken the yen’s value against the U.S. dollar, the head of an opposition party that Japanese Prime Minister Shigeru Ishiba needs to stay in power said on Friday.

“The potential increase in tariffs or tax cuts could lead to inflation (in the U.S.) and therefore higher interest rates,” Yuichiro Tamaki, leader of the Democratic Party for the People (DPP) said at a press conference on Friday.

Following Japan’s general election on Oct. 27, Tamaki’s party, which has 28 lower-house members, has gained influence over the ruling Liberal Democratic Party, which lost its majority in the chamber.

Any increase in prices in Japan resulting from higher import costs could squeeze households in Japan and further undermine public support for Ishiba.

Tamaki said that the Bank of Japan (BOJ) should refrain from raising interest rates until wage growth was consistently outpacing inflation.

“Domestic policies should be conducted for domestic objectives,” he said.

The BOJ ended negative interest rates in March and raised short-term rates to 0.25% in July.

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