At Any Rate Asia Cross Asset Podcast: Japan - The New LDP Leader: Implications for policy and markets
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Oct 13, 2025 The surprise election of Sanae Takaichi has sparked discussions on Japan's economic trajectory and the potential revival of Abenomics. Analysts explore Takaichi's cautious fiscal agenda and its implications for the Bank of Japan's independence. Attention shifts to currency movements, as positioning drove significant dollar-yen changes. Experts warn of a feedback loop between the yen's depreciation and inflation. Meanwhile, Japan's equity market benefits from cyclical exporters, though risks loom from domestic challenges and political uncertainty.
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Fiscal Moves Look Redistributive Not Large Stimulus
- Ayako Fujita sees Takaichi's proposals as redistributive rather than aggressively expansionary fiscal policy.
- She argues most measures target low-income households and will take time to implement.
BOJ Can Still Hike Despite Political Pressure
- Ayako Fujita says Takaichi's remark about government responsibility for both fiscal and monetary policy need not breach BOJ independence.
- If inflation stays elevated, Fujita expects BOJ hikes (roughly one every six months) and a higher terminal rate than markets price.
Positioning Amplified Yen Move
- Junya Tanase highlights positioning dynamics amplified the yen move as long-yen positions were unwound.
- He says that exaggerated positioning plus dollar strength drove outsized DXY and JPY moves this week.