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Japan's Komeito Party and the Liberal Democratic Party break up, is Prime Minister Sanae Takaichi worried?
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Hello everyone, today XM Forex will bring you "[XM Forex Official Website]: Japan's Komeito Party and the Liberal Democratic Party have broken, is Prime Minister Sanae's dream hanging in the balance?". Hope this helps you! The original content is as follows:
On Friday (October 10), affected by the news that Japan’s Komeito Party will withdraw from the coalition government with the Liberal Democratic Party, the US dollar against the Japanese yen once plunged 50 points during the session.
Takaichi Sanae said on Thursday that once she is elected as the next prime minister by parliament, she will immediately order the formulation of a basket of measures to ease the impact of rising living costs on the economy. The withdrawal of the Komeito Party may shake the status quo that Takaichi Sanae will be elected as the next prime minister, thus having a profound impact on Japan's internal affairs. Incidentally, Japan's economic policy, which is biased toward expansion and stimulation, will be redirected.
The Civic Party is an important vote bank in the prime minister election
According to the results of the House of Representatives election in October 2024, the Komeito Party has 24 seats in Japan’s House of Representatives, so it theoretically has 24 votes in the House of Representatives vote for the Prime Minister’s nomination. This number of votes accounts for an important proportion in the ruling alliance formed by the Liberal Democratic Party and the Komeito Party. Although the two parties' www.xmltrust.combined 215 seats do not reach half of the House of Representatives (233 seats), the support of the Komeito Party is still the key to the Liberal Democratic Party maintaining power.
Looking back at the previous election of Shigeru Ishiba, in the prime minister nomination election in November 2024, the Komeito Party and the Liberal Democratic Party jointly supported Shigeru Ishiba. In the first round of voting in the House of Representatives, Shigeru Ishiba received 222 votes (including 24 votes from Komeito), and entered the run-off round after failing to obtain a majority. In the run-off, Shigeru Ishiba won again with 221 votes, and all 24 votes of Komeito were counted among his votes. This result reflects the close cooperation between the Komeito Party and the Liberal Democratic Party in the operation of the government. Although the Liberal Democratic Party suffered a disastrous electoral defeat, the Komeito Party still chose to continue the joint governance line.
Facing the next prime minister election, the leader of the Komeito Party has expressed his resignation to the leader of the Liberal Democratic Party, Takaichi Sanae.the intention of the ruling coalition.
Tokyo is hotly discussing various scenarios for the next Japanese government, including that the new Liberal Democratic Party president Takaichi Sanae may not succeed Shigeru Ishiba as prime minister. Current Japanese market trading has reflected this, with the Japanese yen rising rapidly by 50 points against the US dollar during the session.
The main differences between the Komeito Party and the Liberal Democratic Party
The new Liberal Democratic Party president Takaichi Sanae is expected to seek to establish cooperative relations with the opposition parties, aiming to expand the size of the coalition government. However, Komeito has become increasingly wary of Sanae Takaichi's hard-right stance. On October 4, after meeting with Sanae Takaichi in Tokyo, Saito revealed to reporters that coalition government negotiations between the Liberal Democratic Party and the Komeito Party will start next week.
He said: "We will conduct policy consultations around the coalition government, and if we can reach a consensus, we will form a coalition government. But at this stage, I cannot give any clear answer." This statement hinted that the Komeito party may withdraw from the coalition government, and is also a check on the right-leaning tendency of the Liberal Democratic Party.
In the meeting with Takaichi Sanae, Saito expressed concerns about Takaichi Sanae's political stance. He further emphasized that Japan needs to cooperate with motivated and capable people to build an inclusive society, and called on Takaichi Sanae to discuss the issue of coexistence with foreigners.
On the issue of political funding, Saito pointed out: "One of the main reasons why the ruling party suffered a disastrous defeat in recent elections is the issue of undeclared funds. We hope that you can properly handle this issue." He also requested a discussion on strengthening the supervision of political parties accepting donations from www.xmltrust.companies and groups.
In response to Sanae Takaichi’s idea of expanding the size of the coalition government before the nomination of the Prime Minister, which he proposed during the Liberal Democratic Party’s presidential campaign.
Saito revealed that he had told Takaichi Sanae: "The coalition government needs consistency in policy and ideology, which is not easy. In particular, we have major doubts about the discussions related to 'making Osaka a 'deputy capital'' proposed by the Japan Reform Association and the Osaka Metropolitan Plan. "
He also warned against prematurely expanding the size of the coalition government: "Only after full discussion, reaching policy consensus and achieving unity of ideology and policy, the formation of a coalition government will be possible," implying their dissatisfaction with Sanae Takaichi's inheritance of Abe's governing philosophy.
The withdrawal of Komeito has a major impact on the election of the prime minister
Since the recent election, the Liberal Democratic Party (LDP) and its long-term ally Komeito have been in the minority in both the House of Representatives and the Senate, which makes it difficult to pass the bill itself. The withdrawal of Komeito makes it even more difficult for the Takaichi team to pass the bill.
If Komeito, which has 29 and 25 seats in the House of Representatives and Senate respectively, withdraws from its current alliance with the Liberal Democratic Party, and the opposition parties actively lobby to elect their own leader, then a non-Liberal Democratic Party prime minister may take office. Komeito's center-left social policies oppose constitutional changes and Abe-like political stances, while Sanae Takaichi and conservatives support those policies.
It is true that the political tendencies and policy objectives of the opposition partiesThe targets vary, but they all agree that measures to www.xmltrust.combat inflation and a change of government are necessary. They account for 191 seats in Japan's House of Representatives and 101 seats in the Senate, surpassing the Liberal Democratic Party.
Yuichiro Tamaki is the leader of the recently popular National Democratic Party, which has 28 seats in the House of Representatives. It is said that if the opposition parties form a coalition, he may become the leader, especially if the Constitutional Democratic Party, which has about 148 seats, does not support the leadership of former Prime Minister Yoshihiko Noda as the leader of the new government.
If the Japan Reform Party, the second largest opposition party with about 38 seats, and other small groups join the anti-LDP alliance, the alliance will account for a viable majority in the House of Representatives (465 seats) and the Senate (248 seats).
Counterattack and rhetoric from economists on the Takaichi team
Takuji Aida, an economist advising the policy team of Sanae Takaichi, said that the current weakness of the yen is good for the economy, and active fiscal spending can offset the impact of rising import costs on households. Sanae Takaichi may become Japan's new prime minister.
Takuji Aida played down concerns that aggressive spending could further weaken the yen, pushing up import costs, exacerbating inflation and dragging down consumption.
Takuji Aida, chief Japan economist at Credit Agricole, said on Wednesday that we have developed a defeatist mentality and believe that a weaker yen is a bad thing. This is a major mistake.
The current depreciation of the yen is beneficial because it coincides with rising Japanese stock prices and increased investor confidence, he said, adding that active fiscal policy can reduce the burden of rising import costs.
He said that after the asset bubble burst, the yen appreciated sharply, prompting www.xmltrust.companies to reduce or transfer overseas work and investment.
"Producing goods domestically becomes feasible at an exchange rate of 140 or 150 yen per U.S. dollar. This exchange rate level helps drive the capital investment cycle upward and also serves as a buffer against U.S. tariffs."
Takaichi Sanae's economic platform fully embodies the policy principles of this group, which advocates active government spending to revitalize the economy.
Outlook for the Bank of Japan’s interest rate decision
As for monetary policy, Takuji Aida said that the Bank of Japan is likely to keep interest rates stable until 2027 after raising interest rates once again early next year.
He said: "It is clear that the Bank of Japan has embarked on a tightening path, so it is likely to raise the policy rate to 0.75% by January.
"The Bank of Japan will then suspend its support for the government's spending plan and resume gradual tightening in 2027. "
"In 2027, the effects of (Takaichi Sanae's) active fiscal policy will begin to show, and we will see a significant expansion of domestic demand. "He said. "By then, inflation may pick up along with domestic demand, prompting the Bank of Japan to start a small, gradual increase in interest rates. "
Summary:
If it loses Komeito, the LDP will lose a significant number of coalition seats in parliament, even as it attempts to consolidate support as a minority government in both houses of parliament.
The dissolution of the alliance will bring significant political uncertainty to Takaichi Sanae before she has officially won the prime ministership. Although Sanae Takaichi is still likely to win the parliamentary vote to elect the prime minister due to continued divisions in the opposition, losing this long-time ally will cloud the prospects of passing a supplementary budget before the end of the year.
The policy trial and error space of the Takayama regime has been severely www.xmltrust.compressed: if it insists on easing, it will have to bear the political cost of depreciation of the yen and worsening inflation; if it turns to tightening, it may severely set back economic recovery.
For the Bank of Japan, Ueda and his male governors need to maintain their independence while avoiding direct confrontation with the government. Policy swings may become the norm. The market needs to pay close attention to the October central bank meeting statement and the progress of the parliamentary budget review. These two major events will determine the medium-term direction of the yen exchange rate and monetary policy.
The above content is all about "[XM Foreign Exchange Official Website]: Japan's Komeito Party and the Liberal Democratic Party broke off, is Prime Minister Sanae in high risk?" It was carefully www.xmltrust.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some contents in the article still need to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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