Other financial and political analysts, such as Joseph Kraft of Rorschach Advisory in Tokyo, say the LDP is unlikely to opt for a leadership change at a pivotal moment in talks on tariffs hammering key industries such as automakers.
In a sign of that urgency, Ishiba took a break from campaigning on Friday to ask Washington’s chief tariff negotiator and Treasury Secretary Scott Bessent to continue tariff talks actively. Bessent, who is visiting Japan for the World Expo in Osaka, later said a deal with Tokyo was possible.
“BALANCING ACT”
More likely is that Ishiba will seek to either broaden his coalition or strike informal deals with opposition parties to keep his government functioning after the election, Kraft said.
That prospect has made investors nervous.
Inflation has been a killer issue for Ishiba, as it recently has been for incumbents elsewhere. The price of rice, which has doubled since last year, has become a lightning rod for voter discontent.
In response, opposition parties have promised tax cuts and welfare spending to soften the blow, while the LDP, with one eye on a very jittery government bond market, has been calling for fiscal restraint.
Any opposition deals to weaken that restraint will only heighten investor nervousness about Japan’s ability to refinance the world’s largest debt pile and hamper the Bank of Japan’s long-held goal of normalising monetary policy.
