Answering questions on Wednesday, Takaichi said her team is ready to respond if markets shift. "Should market conditions such as yields move unexpectedly, we will take policy measures such as restructuring various initiatives and reviewing expenditures and revenues," she said. If shocks to Japan's economy emerge, including global turbulence, she added the government would flexibly tap reserve funds. She declined to specify any particular currency or yield levels.
Budget revisions signal what a new government actually intends to do. Market Briefs covers Japanese policy free every weekday.
With parliament in session, Takaichi is pushing legislation to temporarily drop the consumption levy applied to food items and non-alcoholic beverages, moving it from 8% down to 1% for a two-year window beginning in April. She has cast the move as short-term relief for households facing higher costs, while also signaling to investors that the fiscal stance remains responsible.
Her administration will assemble the budget for the fiscal year that starts in April over the coming months. That plan should reveal whether she can push for faster growth while curbing outlays. In the meantime, she will need to keep markets onside as the yen stays weak and long-dated interest rates trend higher in many countries.
By year-end, Takaichi plans a rewrite of Japan's security blueprints, a move expected to indicate how quickly and how far defense spending could increase in the coming years. Over the fiscal year concluding in March this year, her government lifted defense outlays to almost 2% of GDP, reaching that level a full two years earlier than planned. Since then, she has refrained from announcing fresh numerical goals, while officials examine a trajectory that would align with South Korea's pledge to reach 3.5% of GDP for defense over the next decade. "We will deepen concrete and realistic deliberations in accordance with our independent judgment, and build up the process accordingly," she said.
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