By Takaya Yamaguchi

TOKYO (Reuters) – Japan’s government will warn of the pain a weak yen may inflict on households in this year’s long-term economic policy roadmap, a draft seen by Reuters showed, as policymakers grow increasingly concerned about the currency’s declines.

The reference to the weak yen’s impact will likely keep the Bank of Japan (BOJ) under pressure to raise interest rates or slow its huge bond buying – moves some markets believe could slow the currency’s declines.

“Japan’s economy continues to recover moderately, though some sectors, notably consumption, are stalling,” the draft of this year’s long-term roadmap said.

“At present, the pace of wage rises hasn’t caught up with that of inflation,” it said.

“Vigilance is required to the impact a weak yen could have on households’ purchasing power through rising import prices,” according to the draft, seen by Reuters by Tuesday.

On monetary policy, the roadmap called on the BOJ to “sustainably and stably achieve its 2% inflation target while confirming whether a positive wage-inflation cycle is in place,” the draft showed.

The language is roughly unchanged from the previous year’s roadmap, which called on the BOJ to sustainably and stably achieve its 2% inflation target accompanied by wage increases.

The long-term roadmap, which is crafted each year as a key document highlighting the administration’s policy priorities, is expected to be finalised around June 21.

A weak yen has become a headache for Prime Minister Fumio Kishida’s administration, which has seen approval ratings slump as the currency’s decline pushed up households’ cost of living by inflating the price of importing food and fuel.

Japanese authorities spent 9.79 trillion yen intervening in the foreign exchange market to support the yen over the past month, in moves that kept the currency from testing new lows but failing to reverse its downtrend.

BOJ Governor Kazuo Ueda has ruled out using monetary policy to directly influence exchange-rate moves, but signaled the chance of raising rates if the weak yen pushes up inflation more than expected.

Many market players expect the BOJ to raise interest rates from current near-zero levels this year with some expecting such action to happen as early as July.

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