RPT-Japan government panel member Kataoka calls for $149 billion stimulus package

By Leika Kihara and Yoshifumi Takemoto

TOKYO, Nov 17 (Reuters) - Japan must compile a stimulus package of around $149 billion to support an economy hobbled by U.S. tariffs and weak consumption, Goushi Kataoka, a private-sector member of a key government panel, told Reuters on Monday.

The proposed 23 trillion yen ($148.65 billion) in spending and tax cuts would far exceed the 17 trillion yen that was reported by the Nikkei newspaper as the likely size of new Prime Minister Sanae Takaichi's first stimulus package.

Japan's economy may not rebound much after contracting in the third quarter, Kataoka said in an interview, with soft consumption and capital expenditures, automakers hit by Washington's tariffs and U.S. economic uncertainty clouding the outlook for exports.

"Given uncertainty surrounding Japan's economy, it wouldn't be enough to spend just around the same size of last year's extra budget," said Kataoka, who was picked by Takaichi to join her flagship panel covering the administration's growth strategy.

The package should include 20 trillion yen in spending and 3 trillion worth of tax cuts to cushion the economic blow from rising living costs and U.S. tariffs, Kataoka said.

It can be funded with 10 trillion yen in new bond issuance and 13 trillion yen worth of tax and non-tax revenues, he said.

Given the darkening economic outlook, the Bank of Japan should move cautiously when raising interest rates, said Kataoka, a former BOJ board member who is currently chief economist at PwC Consulting.

"It would be premature," Kataoka said when asked about the dominant market view that the central bank will raise interest rates to 0.75% from 0.5% in December or January next year. "I don't think the BOJ will raise interest rates in December."

"The BOJ should wait at least until March or April" to raise rates so it can evaluate how much the government's stimulus package will lift growth and gather more data on next year's wage negotiations, he said.

Kataoka served as BOJ board member from 2017 through 2022, when the central bank was beginning to gradually phase out a radical asset-buying programme deployed in 2013 to pull Japan out of deflation and economic stagnation.

During his term, he regularly proposed stronger monetary easing steps and disagreed with its decision to keep policy steady or phase out stimulus.

($1 = 154.7300 yen)