Takaichi's Bold Tax Moves Stir Market Waves: A Post-Election Test

Japanese Prime Minister Sanae Takaichi faces scrutiny over her promised tax cuts and spending plans after a major election win. While suspending an 8% food sales tax aims to ease living costs, investors are concerned about Japan's high debt and unclear funding strategies. Takaichi remains committed to fiscal responsibility.

Japanese Prime Minister Sanae Takaichi is under intense scrutiny following her significant election victory, which has revived debate over her pledged tax cuts and fiscal strategies.

The Liberal Democratic Party, led by Takaichi, won Sunday's polls by promising to suspend the 8% food sales tax for two years, aiming to lower household expenses. Despite the electoral success, investors remain concerned about Japan's capacity to fund these cuts without worsening its debt situation, already the highest in the developed world.

In her post-election interviews, Takaichi emphasized her commitment to the tax suspension, while ensuring fiscal responsibility. However, the lack of clear financing alternatives has triggered market jitters, with bond sell-offs and currency fluctuations highlighting the challenges ahead for the premier.

(With inputs from agencies.)