Ishiba, Japan
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Japan's election outcome may put the central bank in a double bind as prospects of big spending could keep inflation elevated while potentially prolonged political paralysis and a global trade war provide compelling reasons to go slow on rate hikes.
The ruling LDP has only been able to remain in office as a minority government as a result of the deep divisions among the opposition parties—between the far-right and the nominally liberal parties.
The loss on Sunday left the Liberal Democrats a minority party in both houses of Parliament, while two new nationalist parties surged.
Japan’s shaky ruling coalition is likely to lose its majority in the upper house, exit polls showed after Sunday’s election, potentially heralding political turmoil as a tariff deadline with the United States looms.
The fringe far-right Sanseito party emerged as one of the biggest winners in Japan's upper house election, gaining support with warnings of a "silent invasion" of immigrants.
Sanseito leader Sohei Kamiya's xenophobic views, antisemitic remarks and emphasis on Japan’s ethnic purity have raised alarms.
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Its leader is a former supermarket manager who created his political party on YouTube in the depths of the coronavirus pandemic and campaigned on the Trumpian message “Japanese First.”
Hedge funds that bet the yen would materially weaken following last weekend’s Japanese election were left disappointed after prime minister Shigeru Ishiba announced he would stay on, despite his ruling coalition party losing control of the country’s upper house.