Economist Takuji Aida believes the yen’s current weakness benefits Japan’s economy, as import costs can be offset by fiscal spending. He dismisses concerns of further weakening, stating it aligns with rising stock prices and investor confidence. Aida advises a group of lawmakers advocating aggressive government spending to boost the economy.

Aida suggests that a weaker yen at 140-150 to the dollar encourages domestic manufacturing, driving capital investment and serving as a buffer against U.S. tariffs. His economic platform aligns with likely new premier Sanae Takaichi’s policy principles of revitalizing the economy through aggressive government spending.

Aida predicts the Bank of Japan will keep interest rates steady until 2027, with a possible hike to 0.75% by early next year. He anticipates gradual tightening in 2027 to support government spending plans. The effects of proactive fiscal policy could lead to an expansion in domestic demand and incremental rate hikes.

The BOJ ended a decade-long stimulus last year and raised rates to 0.5% in January, aiming to achieve its 2% inflation target. Governor Kazuo Ueda is prepared to raise rates further if economic and price developments align with forecasts. The BOJ’s strategy aligns with Aida’s predictions for gradual rate hikes in the future.

Read more at Yahoo Finance: Adviser to Takaichi’s policy circle says weak yen is good for economy