Japan’s governing party, the Liberal Democratic Party (LDP), elected Sanae Takaichi as its new leader on Saturday, setting her to become the country’s first female prime minister.
First female premier
The 64 year old politician defeated Shinjiro Koizumi 185 to 156 in a second round vote to become the head of the LDP, which has governed Japan almost uninterrupted since the end of the Second World War.
Takaichi was the only woman among the five LDP candidates and won against the more moderate Koizumi, who would have become Japan’s youngest modern leader.
“Right now, rather than feeling happy, I truly believe this is where the real challenge begins. There is a mountain of work we must all tackle together,” she said during her victory speech.
Takaichi is a former Minister of Economic Security and Internal Affairs. She says her hero is Margaret Thatcher, Britain’s first female prime minister.
Takaichi is set to replace Prime Minister Shigeru Ishiba, who said last month he would step down after a year in office, triggering the leadership race.
On October 15, a vote in parliament will take place to choose a replacement for Ishiba, and Takaichi is favored to win, as the LDP’s coalition holds the largest number of seats.
Interest rates
The new leader is an advocate of late premier Shinzo Abe’s Abenomics strategy, which aims to boost the economy with aggressive spending and loose monetary policy.
She has criticized the Bank of Japan’s interest rate increases. After her victory, she said that the BOJ’s monetary policy must account for the fragility of the economy and wage growth.
“Takaichi’s election had weakened the chances of the BOJ raising rates this month, which markets had priced at around a 60% chance before the vote,” Reuters quoted Naoya Hasegawa, chief bond strategist at Okasan Securities in Tokyo.
High government spending could worry investors in Japanese bonds, as the debt load puts downward pressure on the Japanese yen.
US trade deal
One of the top priorities of the next Prime Minister of Japan would be to implement the trade deal with the US agreed in July. The deal lowers tariffs on Japanese exports to 15% and includes a pledge by Japan to invest $550 billion in the US.
Takaichi said that she would honor the investment deal with the US, but has previously raised the possibility of reopening talks on the agreement.
