The Japanese government and the Bank of Japan must conduct policy with careful consideration of the exchange rate, which at its current level is hurting consumption, the government's top economic council said, adding that reviving consumption is key to the government's short-term economic policy.
"We cannot ignore the impact of a weak yen and rising prices on household purchasing power. Therefore, it is necessary to take into account the recent fall of the yen for policy development and implementation," the council said, pointing also to the concern of politicians about the economic consequences of a weak yen, which hit consumption, pushing up the cost of importing fuel and food.
The weak yen is also likely to be a key topic of debate at the Bank of Japan's policy meeting, the results of which will be announced on Wednesday. Earlier in July, the yen briefly hit a 38-year low against the US dollar, prompting intervention by the Japanese government.
"The government will seek to raise the minimum wage and take measures to mitigate the impact of rising prices, such as payments to low-income households and temporary subsidies to reduce utility bills," the council said, adding that consumption had been the weak point in Japan's fragile recovery and was the main reason for the economy's contraction in the first quarter.