Japan looks increasingly likely to fire both fiscal and monetary barrels in the coming weeks to help recovery and arrest unwelcome gains in the yen, with direct currency intervention off the table after a cool reception from its U.S. ally.
After the rising yen helped push exports down for a sixth month in March and deadly earthquakes hit southern Japan last week, the Bank of Japan (BOJ) is facing calls from government aides to promptly expand its money-printing stimulus.
Prime Minister Shinzo Abe is already set to announce a fiscal stimulus plan of up to 10 trillion yen ($91 billion) extra spending around the time he hosts a Group of Seven summit in late May, which could agree on more government expenditure to boost global growth.
And he could top that up with disaster-relief spending after the quakes, say government and ruling party officials involved in the policy-making.
Abe's aides also said the economic impact of the quakes raised the chances he would delay a sales tax hike scheduled for next year and increased the need for more central bank action.