(Seoul = News1) Reporter Shin Ki-rim = Sanae Takaichi, a nationalist politician with conservative leanings, has been elected as Japan’s first female Prime Minister. With more than half the votes secured in the House of Representatives on the 21st, she broke the political glass ceiling and became the 104th Prime Minister of Japan.
Prime Minister Takaichi has pledged to address the gender gap within the political arena and has confirmed her plan to appoint Satsuki Katayama, a member of the House of Councillors, as the Finance Minister. Katayama is likely to become Japan’s first female Finance Minister. Her appointment is seen as significant given the growing dissatisfaction and concerns over the weak yen and rising inflation.
Following Takaichi’s inauguration, the Nikkei index reached an all-time high, an outcome attributed to expectations of expansionary fiscal policies and the political stability resulting from forming a new coalition government with the Japan Innovation Party.
Experts have noted that ‘Sanaenomics,’ Takaichi’s economic policy, largely inherits the policies of former Prime Minister Shinzo Abe but requires realistic adjustments due to Japan’s changed economic environment. Osamu Takashima, Chief Forex Strategist at Citibank, pointed out to Reuters that, unlike a decade ago, Japan now faces opposite challenges of inflation and a weak yen.
There is speculation that Prime Minister Takaichi may not pursue aggressive fiscal easing. With the coalition with the Innovation Party and Katayama’s appointment as Finance Minister being confirmed, structural reforms and strategic investments may take precedence over further yen weakening, according to Nomura Securities’ macro strategist, Nakamura Naka.
Due to current high inflation and the weak yen, it is predicted that Prime Minister Takaichi will find it difficult to exert political pressure on the Bank of Japan to prevent interest rate hikes.
Citibank’s Takashima warned that pressuring the central bank amid widespread public dissatisfaction with inflation and the weak yen could be a “very risky game” that might lead to a loss of popularity.
Christopher Wong, a currency strategist at OCBC, mentioned that the coalition with the Innovation Party has resolved political uncertainties and, if macroeconomic conditions allow, could pave the way for the Bank of Japan to raise interest rates on October 30.
The appointment of Katayama as Finance Minister is interpreted as a move towards achieving a balance against extreme fiscal easing tendencies.
Takashi Kiuchi, an economist at Nomura Research Institute, evaluated that the coalition with the Innovation Party, which supports a smaller and more efficient government, along with Katayama’s appointment, would moderate Prime Minister Takaichi’s tendency for aggressive fiscal spending and encourage a balanced approach.
If Prime Minister Takaichi’s strong conservative foreign policy statements translate into actual policy, it could pose security risks, and whether this stance will shift towards realism warrants attention. UBS economist Masamichi Adachi predicts that Takaichi will face difficult issues such as demands for increased defense spending and the weak yen in next week’s meeting with U.S. President Donald Trump.