Takaichi Tax Cut Plan Weighs on Yen and JGBs

Japanese Prime Minister Sanae Takaichi is set to announce a plan to cut Japan's sales tax on food and drink items, sparking concerns over the country's deteriorating fiscal outlook. The proposed tax cut would reduce the consumption tax rate for these items to 1% for two years, according to reports.

The Nikkei newspaper reported that Takaichi is expected to announce the proposal as soon as this week, with officials instructed to begin working on the plan by Thursday at the latest. The move could put pressure on the yen and government bonds if investors become concerned about Japan's fiscal situation.