Japanese Prime Minister Sanae Takaichi’s cabinet approved a multi-billion dollar stimulus package on Friday, delivering on the new leader’s promise to pursue an expansionary fiscal policy.
The stimulus, worth JPY 21.3 trillion ($135.40 billion), includes general account outlays of JPY 17.7 trillion, significantly larger than last year’s JPY 13.9 trillion, representing the biggest fiscal bazooka since the COVID pandemic. The package also includes JPY 2.7 trillion in tax cuts.
The package aims to ease the burden of inflation on households and businesses, according to media reports—an approach that might contradict traditional economic views that stimulus tends to be inflationary.
Yet bitcoin BTC$85,389.03, widely seen as a hedge against inflation and monetary and fiscal imprudence, fell 0.8% to $85,480, extending a recent sell-off that saw prices drop from a record high of $126,000 reached on Oct. 8.
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Market participants are eagerly anticipating at least a 25 basis point (BPS) interest rate cut from the Federal Reserve on Wednesday. The Federal Reserve, the central bank of the United States, is expected to begin slashing interest rates on Wednesday, with analysts expecting a 25 basis point (BPS) cut and a boost to risk asset prices in the long term.Crypto prices are strongly correlated with liquidity cycles, Coin Bureau founder and market analyst Nic Puckrin said. However, while lower interest rates tend to raise asset prices long-term, Puckrin warned of a short-term price correction. “The main risk is that the move is already priced in, Puckrin said, adding, “hope is high and there’s a big chance of a ‘sell the news’ pullback. When that happens, speculative corners, memecoins in particular, are most vulnerable.”Read more
