TOKYO: Sanae Takaichi, a conservative nationalist and former internal affairs minister, is poised to become Japan’s first female prime minister after winning the leadership race of the ruling Liberal Democratic Party (LDP) on Saturday. Her victory ensures she will replace outgoing Prime Minister Shigeru Ishiba, as the LDP holds a parliamentary majority.
Takaichi’s win marks a significant moment in Japan’s political history, but also ushers in uncertainty over her economic policies, her relationship with Washington, and her handling of tense regional dynamics.
Analysts said Takaichi’s popularity among grassroots party members was key to her win. “She was the most popular candidate among the non-congressional LDP members,” said Tohrus Sasaki of Fukuoka Financial Group. “Her cabinet is likely to be very popular, which could make it influential on monetary policy.” Sasaki predicted a short-term depreciation of the yen and a possible steepening of Japan’s bond yield curve.
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Economists expect Takaichi to continue the fiscal expansion seen under previous administrations, though some questioned how she will balance growth with fiscal responsibility. Tomohisa Ishikawa of the Japan Research Institute said her call for a “responsible expansionary fiscal policy” could sustain growth, but warned that deficit-financed bonds may heighten risks of overspending. “It has become harder for the Bank of Japan to raise interest rates,” he added.
Kazutaka Maeda of the Meiji Yasuda Research Institute described Takaichi as representing the “sharpest departure” from Ishiba’s fiscally cautious stance. While she has softened some earlier proposals, including a controversial plan to cut the consumption tax — any revival of such policies could drive inflation and weaken the yen, he said. “There is skepticism surrounding Takaichi’s ability to manage the administration effectively,” Maeda noted.
Market strategists largely expect the Bank of Japan (BOJ) to delay interest rate hikes in light of her win. “Takaichi’s victory makes it even more likely the BOJ will adopt a wait-and-see mode,” said Mari Iwashita of Nomura Securities. Naoya Hasegawa of Okasan Securities said the market had priced in a more hawkish outlook under rival candidate Koizumi, but now expects a “steepening” of the yield curve as investors adjust to Takaichi’s likely stimulus-driven policies.
Beyond the economy, analysts are watching how Takaichi will shape Japan’s foreign relations, particularly with China, South Korea, and the United States. Yuka Hayashi of The Asia Group said Takaichi’s “Japan First” agenda mirrors elements of Donald Trump’s “America First” approach, potentially strengthening ties between Tokyo and Washington. However, her repeated visits to the controversial Yasukuni Shrine and hardline stance on wartime legacy issues may strain ties with Asian neighbours.
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“Takaichi is a very experienced politician,” Hayashi said. “But this is a challenging time for the LDP. She’ll need to focus on party unity and avoid excessively conservative foreign policy positions.”
Takaichi, 63, will formally assume office once the LDP’s parliamentary vote confirms her appointment next week. Her leadership marks both a milestone for gender representation in Japanese politics and a test of how far conservative populism can steer the world’s third-largest economy