The Japanese Ministry of Finance just announced that it will cut spending for the first time in 12 years in the 2024/25 budget, as they prepare for a shift away from ultra easy monetary policy settings. The budget is estimated around ¥112 trillion, down 2% from the current year’s initial amount of roughly ¥114 trillion.

In estimating borrowing costs, the government has now assumed higher interest rates – which is the first increase in 17 years. They are projecting interest rates at 1.9%, up from the current 1.1%, and that will push the debt-servicing costs up by 7% to ¥27 trillion in the upcoming fiscal year.

This article was written by Justin Low at www.forexlive.com.