Japan's Ruling Party Set for Landslide Victory, Polls Show

The Bank of Japan may be forced to accelerate interest rate hikes to counter a weak yen and inflation pressures tied to expansionary fiscal policy. Japan is heading toward a pivotal political moment as Prime Minister Sanae Takaichi’s Liberal Democratic Party (LDP) is projected to win a sweeping victory in next week’s lower house election, according to an Asahi newspaper poll. The survey shows the LDP exceeding a majority of 233 seats out of 465 seats, up from 198 seats, while its coalition with the Japan Innovation Party could approach 300 seats. The snap election followed parliament’s dissolution and seeks support for higher spending and tax cuts. A strong win would tighten Takaichi’s grip on power and reinforce her fiscal policy, fueling concerns over inflation, bond yields, and the yen, which has already been volatile. Analysts note, however, that a clear mandate could curb more extreme tax proposals from rivals.