Japan’s upper house approved a massive supplementary budget worth 18.3 trillion yen, or about $118 billion, on Tuesday, clearing the way for Prime Minister Sanae Takaichi to implement the country’s largest economic stimulus package since the COVID-19 pandemic.
The additional spending plan for fiscal year 2025 had already passed the lower house of parliament last week. The package is significantly larger than last year’s 13.9 trillion yen stimulus and will be funded largely through fresh government debt, highlighting the administration’s aggressive approach to supporting economic activity despite growing fiscal concerns.
Meanwhile, Japan’s benchmark 10-year government bond yields have climbed to their highest level in 18 years. The rise in yields comes as markets anticipate that the Bank of Japan will raise interest rates to 0.75% at its policy meeting on Friday, which would mark the highest borrowing costs in roughly three decades.
