Takaichi elected Japan’s first female premier, shattering glass ceiling with hard-right turn
She takes over when Japanese politics appears more fractured than at almost any other time in recent memory
[TOKYO] Hardline conservative Sanae Takaichi was elected Japan’s first female prime minister on Tuesday (Oct 21), shattering the political glass ceiling and setting the country up for a decisive turn to the right.
An acolyte of former prime minister Shinzo Abe and an admirer of Britain’s Margaret Thatcher, Takaichi is expected to return to Abe-style government stimulus as she attempts to jumpstart an economy saddled with slow growth and rising prices.
While her victory marks a pivotal moment for a country where men still hold overwhelming sway, she named just two women to her Cabinet, far fewer than what she had promised.
Takaichi is also likely to usher in a sharp move to the right on issues such as immigration and defence, making her the latest leader in tune with the broader rightward shift in global politics. She received 237 votes in the election in parliament’s 465-seat lower house on Tuesday, and then won a similar vote in the less powerful upper house.
Her victory was secured after her Liberal Democratic Party, which has governed Japan for most of its post-war history, agreed on Monday to form a coalition with the right-wing Japan Innovation Party, known as Ishin.
Together, the parties are two seats short of a majority in the lower house. That means Takaichi’s success will depend on her winning the cooperation of more opposition lawmakers, said Tadashi Mori, a professor of politics at Aichi Gakuin University.
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“The two parties do not command a majority in either chamber and to ensure a stable government and gain control of key parliamentary committees, they will need to secure more than half the seats,” he said.
Previous coalition broke up after quarter-century
Takaichi takes over when Japanese politics appears more fractured than at almost any other time in recent memory, thanks in part to the rise of the smaller, hard-right Sanseito Party, which has siphoned voters away from the LDP.
“Since former prime minister Abe passed away, we’ve felt that both national politics and the LDP itself have drifted leftward,” Sanseito head Sohei Komiya told broadcaster NHK, adding that he hoped Takaichi would steer national politics back to the middle.
“While we won’t hesitate to oppose her when necessary, we intend to maintain a friendly working relationship,” he said.
The LDP’s former coalition partner, the more moderate Komeito, broke up their 26-year-old alliance this month after the LDP chose the right-wing Takaichi as its new leader.
No “Nordic” Cabinet after all
Takaichi named just two women to her Cabinet: fellow Abe disciple, Satsuki Katayama will become the country’s first female finance minister while Kimi Onoda will become economic security minister.
In her leadership campaign, Takaichi had promised to boost the number of women in the Cabinet to match socially progressive Nordic countries.
The percentage of female ministers in Nordic governments ranges from Denmark’s 36 per cent to Finland’s 61 per cent. Under Takaichi, women will make up 16 per cent of Japan’s Cabinet, including her.
“Only two female ministers, no surprise,” said Yoko Otsuka, a professor of welfare policy and gender studies at Ritsumeikan University. “A female prime minister might slightly improve Japan’s Global Gender Gap Index ranking, but the reality barely changes.”
Takaichi trade moves stocks higher
Takaichi’s endorsement of Abe-style fiscal stimulus has prompted a so-called “Takaichi trade” in the stock market, sending the Nikkei share average to record highs, the most recent on Tuesday.
But it has also caused investor unease about the government’s ability to pay for more spending in a country where the debt load far outweighs annual output. Both the yen and bond prices have weakened as a result.
Any attempt to revive “Abenomics” could also run into trouble because the policy was devised to fight deflation, not higher prices, said Aichi Gakuin’s Prof Mori.
Some analysts say Ishin, which has advocated for budget cuts, could restrain some of Takaichi’s spending ambitions. Takaichi has said defence and national security would be core pillars of any administration she led. She pledged to raise defence spending, deepen cooperation with the United States and other security partners. US President Donald Trump may visit as early as her first week in office.
A frequent visitor to the Yasukuni war shrine in Tokyo that some Asian neighbours view as a symbol of wartime aggression, Takaichi has also called for a revision of Japan’s post-war pacifist constitution to recognise the existence of the nation’s military forces.
Rising political star Shinjiro Koizumi will serve as defence minister while veteran lawmaker Toshimitsu Motegi will be foreign minister.
Takaichi was sworn in as Japan’s 104th prime minister on Tuesday evening, succeeding Shigeru Ishiba, who last month announced his resignation to take responsibility for election losses.
Finance minister could unsettle yen bears
Analysts said the appointment of Katayama as finance minister could give markets cause to pause before pushing the yen too low, but it might also help Takaichi find fresh ways to fund bold economic stimulus plans.
In an interview with Reuters in March, Katayama, a 66-year-old veteran upper house lawmaker, said Japan’s economic fundamentals suggest the yen’s real value is closer to 120 to 130 per US dollar.
Those comments were made when the yen had fallen to around 150 against the greenback on market expectations that the Bank of Japan (BOJ) would go slow on monetary tightening.
The US dollar briefly fell to around 150.50 yen on a local media report that Katayama would get the job, before recouping losses to climb above 151 yen.
Akira Moroga, chief market strategist at Aozora Bank, said: “Given her past remarks, it seems Katayama favours reversing a weak yen. Markets may have seen that as similar to the views of US Treasury Secretary Scott Bessent.”
Speaking to reporters after her appointment, Katayama said it was desirable for foreign exchange rates to move stably, reflecting fundamentals. She declined to comment on BOJ policy.
The yen and bond yields fell after the parliamentary vote on market expectations that Takaichi, a proponent of expansionary fiscal and monetary policy, would deliver big spending and push back against an early BOJ rate hike.
A former finance ministry bureaucrat well-versed in fiscal affairs, Katayama has a knack for currency diplomacy, and has befriended former and incumbent executives alike at the ministry overseeing exchange-rate policy.
She is known for being outspoken and for her punchy decision-making, which contrasts with the incumbent, Katsunobu Kato, who rarely goes off script and keeps a low profile.
In the March interview, Katayama said US President Donald Trump’s administration did not want excessive yen weakness versus the US dollar. Indeed, Bessent said last week the yen would find its own level if the central bank follows “proper monetary policy” in his latest swipe at the slow pace of BOJ rate hikes.
The appointment of Katayama comes at a time of rising living costs, blamed in part on higher import prices caused by a weak yen. Those factors have hurt households and the ruling party’s approval ratings.
As a former bureaucrat, Katayama knows well the inner workings of the finance ministry’s Budget drafting.
While her background at the finance ministry could prod her to call for fiscal discipline, some analysts say she could use her expertise to help Takaichi find ways to fund her bold spending plans.
“She’ll know how to find sources of revenue if Takaichi wants to expand fiscal spending,” said Hiroyuki Machida, director of Japan FX and commodities sales at ANZ. “Personally, I think this appointment will accelerate (the) ‘Takaichi trade’.”
Katayama said she would focus on revitalising the economy with expansionary fiscal policy.
She will also be heading the ministry that oversees official communication with the central bank, although little is known about her stance on BOJ rate hikes.
Economic and political reality could prevail as Japan faces challenges different from a decade ago, when Abe deployed the “Abenomics” mix of fiscal and monetary stimulus that Takaichi still praises.
With inflation exceeding its 2 per cent target, the BOJ’s exit last year from a decade-long stimulus and its two rate hikes since then came amid political pressure to combat yen falls.
“Japan’s current problem is not deflation and a strong yen, but inflation and a weak yen. There’s also pressure from Washington for the BOJ to raise interest rates,” said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.
“It would be hard for Takaichi’s administration to exert strong pressure on the BOJ to delay rate hikes,” he added, predicting the chance of a rate increase in December.
Markets will focus on Katayama’s views on whether the BOJ should keep raising interest rates, which could increase Japan’s debt-servicing costs but help keep sharp yen falls in check.
“Katayama is a former finance minister bureaucrat and so well-informed on the ministry’s affairs,” said Eiji Douke, chief fixed-income strategist of SBI Securities. “She’s likely neutral on fiscal and monetary policy.” REUTERS
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