JPY Intraday Comment

Research evidence excerpt

JPY Intraday Comment

Nomura | JPY Intraday Comment 17 June 2026

pricing of expecting approximately 20bp of hikes by year-end, we believe any upward

pressure on USD, which could be initially caused by a hawkish policy statement, would

ease over the course of Chair Warsh's press conference. If not, and USD/JPY remains

elevated, we should be mindful of the potential for an MOF JPY-buying intervention, given

it conducted such an operation on 1 May 2024, about an hour after Powell’s post-meeting

press conference (Fig.1).

The government is likely to announce a combination of food consumption tax cut

policy and cash handout policy for its interim report at the National Council

A draft of the consumption tax cut policy presented at the working-level meeting of the

National Council was composed of two elements: (1) a reduction in the consumption tax

rate on food items to 1% (from current 8%) for two years from April 2027, and (2) the

introduction of income-linked cash benefits in the next fiscal year equivalent to the

remaining 1 percentage point.

While reducing the consumption tax rate to zero percent poses technical difficulties from a

POS system perspective, the combination of a tax cut and benefit payments effectively

achieves the equivalent of a zero-percent rate, thereby enabling the Takaichi

administration to fulfil its pledge made during the February general election.

A defacto tax reduction to 0% would likely require JPY5trn of spending annually,

while detailed discussions on this have yet to make any notable progress

However, discussions on funding sources for this policy have yet to make notable

progress. A defacto reduction to zero percent would require annual spending of

approximately JPY5trn. The Takaichi administration, mindful of concerns over rising long-