00:00Just three months into the job, Prime Minister Sanai
00:08Takeichi dissolved Japan's lower house, calling a fresh vote for February 8th.
00:14Coming from a string of election setbacks for the ruling Liberal Democratic Party,
00:24Takeichi is aiming to capitalize on high public support
00:28and increase her majority in the more powerful lower house.
00:33Some recent polls show an approval rating of more than 60%.
00:38I think Takeichi is really in an extremely enviable position.
00:42I mean, her support rates have been consistently extremely high,
00:46and I think that's going to do quite a lot for her in this election.
00:49A stronger mandate would make it easier for Takeichi to push through her agenda,
00:54including higher defense spending and the largest supplemental budget since the pandemic.
01:01But the road to victory might not be straightforward.
01:04The LDP's alliance with Kometo fractured last year, ending a 26-year political partnership.
01:12The realignment injects new uncertainty into Japan's electoral dynamics.
01:17Voters, though, are more focused on the cost of living.
01:22Inflation has stayed above the Bank of Japan's 2% target for more than three years,
01:28while wages lag and a weak yen pushes up import cost,
01:33giving a sense of falling living standards.
01:36To ease the pressure, Takeichi pledged to suspend the 8% sales tax on food for two years.
01:44Maybe it's because of the weather, but the price of vegetables, some are just shocking, aren't they?
01:51Even things like snacks and chocolate, their prices haven't doubled yet,
01:55but they've suddenly gone up quite a bit.
01:57Same with rice.
01:58I wish they stopped just talking about tax cuts
02:02or eliminating the consumption tax during the election season
02:05and actually put realistic measures into practice.
02:08The stakes are high.
02:11An increased majority would give Takeichi a green light
02:14to pursue what supporters call a more assertive Japan,
02:19with higher defense spending and state-led investment.
02:23But a loss of seats would be a self-inflicted wound for the new prime minister,
02:29who has said she would step down as party leader if that happens.
02:33Even before ballots are cast, markets are reacting.
02:38The yen has wavered, and the government bond yields have risen,
02:42reflecting investor unease over Japan's fiscal path.
02:47Since October of last year,
02:49we have taken a very responsible approach to public finance,
02:52talking about responsible, sustainable and proactive fiscal policies.
02:56We are not talking about expansionary fiscal policies.
02:59And this is demonstrated by some of the numbers that we see.
03:03So I ask the market participants to calm down.
03:06Japanese stocks have already outperformed many of their peers
03:10as investors focus on the so-called Takeichi trade.
03:15Ariel Busetto, Bloomberg, Tokyo.
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