Japanese Prime Minister Shinzo Abe presents economic stimulus package worth more than US$266 billion

Japanese Prime Minister Shinzo Abe

Japan launched an economic stimulus package worth more than 28 trillion yen (US$266 billion) on Wednesday, media reported, days before the central bank is expected to unveil its own growth-boosting measures.

Prime Minister Shinzo Abe announced the programme in a speech in southwestern Japan, giving few details except to say it would include about 13 trillion yen in fiscal measures including government spending, according to Jiji Press news agency.

More highlights of the package were expected next week when the cabinet is due to approve the measures.

Abe promised a stimulus package – which earlier reports had varied at being worth 10 to 30 trillion yen – after Britain’s vote last month to quit the European Union sparked a rally in the yen that threatened profits at Japan Inc.

Traders tend to buy Japan’s currency as a safe bet in times of turmoil or uncertainty, but it makes the country’s exporters less competitive overseas and takes a bite out of their bottom line.

The news comes as speculation mounts that the Bank of Japan will further ease monetary policy after a two-day meeting on Friday.

Since taking the helm more than three years ago BoJ governor Haruhiko Kuroda has overseen a massive asset-buying plan that now stands at an unprecedented 80 trillion yen annually. The scheme is a cornerstone of Abe’s push to beat years of deflation and kick-start growth, dubbed Abenomics.

But while Kuroda has insisted the central bank’s target to reach 2 per cent inflation is realistic, the BoJ has been forced to push back its timeline for meeting that goal several times.

The government and central bank have come under increasing pressure to do more for the economy as a string of weak readings and sagging business confidence highlight a long-running weakness.

The dollar jumped as high as 106.54 yen from around 105.01 yen in the morning, after Fuji Television flagged the stimulus on Wednesday afternoon. It was sitting at 105.54 yen after the announcement.