But it’s more complicated than that. <\/p>\n
When Takaichi came into office in October, government bond yields – effectively the interest Japan pays to borrow money – jumped. <\/p>\n
That’s a major concern for investors because of Japan’s steep public debt. More spending and lower taxes – which Takaichi has been promising – means the government needs to borrow more money. <\/p>\n
Japan’s bond market is one of the largest in the world, so even small changes in Tokyo can ripple across global markets, affecting borrowing costs, investment decisions, and currencies.<\/p>\n
Investors are also watching interest rates because the Bank of Japan is trying to move away from decades of ultra-low rates to control inflation. <\/p>\n
The cost of rice, for example, doubled in 2025. Rising prices are a shock for a country that has become accustomed to stable or falling prices.<\/p>\n
This was central to the message that powered Takaichi’s rise: voters feel poorer and prices feel higher. After all, it was one of the issues that cost her predecessor his job. <\/p>\n
Takaichi’s proposed tax cuts may ease the pain for households in the short term.<\/p>\n
But Keiichiro Kobayashi, professor of economics at Keio University, warns that this is a dangerous path: “An increase in spending would just stimulate inflation and increase the cost of living.”<\/p>\n
Instead, he says, the government should allow the Bank of Japan to continue raising interest rates to fight inflation, while tightening government spending, which would also satisfy investors. <\/p>\n
Because Japan is less attractive to foreign investors when interest rates are low and government spending is high, that reduces demand for the currency and weakens it.<\/p>\n
A weaker yen pushes up the cost of imports, especially energy and food, but it can help exporters competing with cheaper Chinese goods. <\/p>\n
It’s an incredibly delicate balancing act that Takaichi cannot escape if she wants the growth she has promised. <\/p>\n
But the challenges go beyond markets. <\/p>\n","protected":false},"excerpt":{"rendered":"But it’s more complicated than that. When Takaichi came into office in October, government bond yields – effectively…\n","protected":false},"author":2,"featured_media":417214,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[49,50,51,47,52,48],"class_list":["post-417213","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/417213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=417213"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/417213\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/417214"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=417213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=417213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=417213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}