Takaichi Defends Policy as Underpinning Yen, Approval Rating Slumps

A $60B Vote of Confidence

Japanese Prime Minister Sanae Takaichi's defense of her government's policy as underpinning market trust in the yen is a significant move, given the challenges she faces in addressing the rising cost of living and the impact of the weak yen on the Japanese economy. The administration's approval rating slumped in July to the lowest level since she took office last year, the Yomiuri newspaper reported. This slump is a sign that rising living costs are hitting her popularity, and it adds to the headaches for Takaichi, who has seen her expansionary fiscal and monetary policy bias cause a spike in bond yields and a slump in the yen to four-decade lows.

Takaichi's flagship policies focusing on boosting investment in growth areas have pushed bond yields to multi-decade highs on market fears it could lead to increased debt issuance. The government has not explained how it would fund the tax suspension which, coupled with rising defense spending, adds strains to Japan's already tattered finances. The Bank of Japan raised interest rates to a 31-year high of 1% in June, though real borrowing costs remain negative with inflation hovering around its 2% target for nearly four years.

Why Cursor?

The approval rating of Takaichi's administration fell to 57%, down from 69% in June and the first time it has dropped below 60% since she took office, Yomiuri said. The percentage that disapproved of her administration's efforts to combat the rising costs of living rose to 71%, up from 56%, it said. Those polled who disapproved of her administration's efforts to combat the rising costs of living rose to 71%, up from 56%, it said. Other recent media polls have also seen Takaichi's approval ratings slide. Kyodo news agency reported on Friday Takaichi may reshuffle her cabinet in August or September.

The Road Ahead

Takaichi's defense of her policy and the slump in her administration's approval rating are significant because they indicate the challenges she faces in addressing the rising cost of living and the impact of the weak yen on the Japanese economy. The administration's approval rating slumped in July to the lowest level since she took office last year, the Yomiuri newspaper reported. This slump is a sign that rising living costs are hitting her popularity, and it adds to the headaches for Takaichi, who has seen her expansionary fiscal and monetary policy bias cause a spike in bond yields and a slump in the yen to four-decade lows.