FISCAL RESPONSIBILITY
Beyond the headlines, analysts said the election is likely to become a referendum on fiscal policy.
Takaichi has embraced an expansionary economic agenda aimed at easing the cost-of-living pressures facing households, particularly pensioners on fixed incomes.
Her Cabinet has approved a record budget for the next fiscal year, and she has proposed scrapping the 8 per cent sales tax on food – a significant departure from the LDP’s traditional emphasis on fiscal discipline.
Markets, however, are uneasy. Japan’s 10-year government bond yields climbed in early trading on Tuesday to their highest in nearly three decades.
“(One) argument is that her expansionary fiscal policy and ratcheting up Japan’s already record-high public-debt-to-GDP (gross domestic product) ratio, which is now about 250 per cent, is causing … interest rates to surge,” Kingston said.
“This hasn’t really yet hit the average consumer, but in the next couple of months, this is going to hit hard.”
But Taniguchi said the prime minister is not ignoring market signals and is “fully cognisant of the creeping interest rate hike”.
He noted that Takaichi has stressed her government will issue fewer Japanese government bonds than before.
Still, Taniguchi cautioned that “how the market is going to react is another question”.
“Reducing consumption tax or value-added tax for food and food materials, interestingly, is now a bipartisan consensus because the opposition party is proposing almost exactly the same thing. So, it’s a new landscape,” he added.
https://www.channelnewsasia.com/east-asia/japan-snap-election-sanae-takaichi-ldp-popularity-power-analysts-5870271
