Moody’s Investors Service cut Japan’s credit rating, a setback to Prime Minister Shinzo Abe a day before today’s campaign start for an election that he wants to focus on the economy.
Moody’s reduced the rating for the world’s third-biggest economy one level to A1, the same as Bermuda, Israel, Oman and the Czech Republic, it said in a statement yesterday in Tokyo. The yen dropped to a seven-year low, then reversed the decline, while Japanese government bonds were little changed.
The ratings company cited uncertainty over whether Japan will achieve its deficit-reduction goals and succeed in boosting growth, two weeks after Abe postponed an increase in the nation’s sales tax. The Bank of Japan is buying record amounts of JGBs issued by a government that’s already burdened by the world’s heaviest public debt load.
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