Japan’s vice economics minister called on the Bank of Japan to deal “appropriately” with any negative impact from a planned sales tax hike in April, signalling his desire for further easing by the central bank to offset the blow to the economy.

Yasutoshi Nishimura, senior vice-minister of the Cabinet Office, also told Reuters in an interview on Friday that Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda would hold regular talks on how to cope with the impact of the tax increase.

“There are concerns that the economy may slump after the sales tax hike even though we will implement an economic package,” said Nishimura, who can attend the BOJ’s policy reviews and voice opinions as a representative of the Cabinet Office.

“I believe the BOJ will deal appropriately with the situation at the time,” he said, when asked about chance of further monetary easing.

The BOJ launched an aggressive stimulus programme in April this year, pledging to double base money via asset purchases to support the economy and accelerate inflation to 2 per cent in roughly two years.

Markets have been rife with speculation the BOJ may ease again early next year to cushion the pain from the sales tax hike to eight per cent from five per cent, although Kuroda has said the economy can withstand the damage without additional stimulus. Abe will hold regular discussions with Kuroda to guard against any negative shocks from the tax hike, Nishimura said.

“The prime minister wants a more flexible (response) as there are some anxious factors,” Nishimura said. “He wants to share it with the BOJ and wants the BOJ to do what it should do.”

This week the government dropped the term “deflation” in describing the economy for the first time in four years and data on Friday showed core consumer inflation at a five-year high. But Nishimura remained cautious about declaring a victory in the battle against falling prices.

“We have the sales tax hike coming so we must be cautious about making such a judgment,” Nishimura said. “It won’t be that easy,” he added, when asked whether the government could declare by the middle of next year that deflation has been beaten.

Abe’s aggressive stimulus strategy to snap the economy out of deflation has weakened the yen since he returned to power a year ago. The dollar rose as high as 105.05 yen on Friday, a level not seen since October 2008.

“I welcome the fact that the excessive yen gain has been corrected, and a weak yen is a plus for the Japanese economy from the macro point of view,” Nishimura said.

But he added that the weaker currency is also having negative effects on households and small companies.

To mitigate such effects, he urged firms with higher revenues to raise wages, saying that salaries hold the key for the economy to overcome the impact of the sales tax hike and conquer deflation in the coming year.

“The biggest point in the first half of next year is to what extent wage hikes can be realised,” he said.