Japan’s prime minister has defended ultra-easy monetary policy during the July 10 vote.
Japan’s upper house election campaign kicks off, Prime Minister Fumio Kishida strikes back Criticism of ultra-easy monetary policy He continued to support despite concerns that it would accelerate price gains.
Kishida defended the government’s approach in a televised debate with eight other party leaders on Tuesday, marking the start of the campaign for the July 10 election. Kenta Izumi, leader of the biggest opposition party, the Cadets, used the term “Kishida inflation” in an attempt to take advantage of recent price increases to undercut the prime minister’s relatively strong support.
“The current inflation is caused by rising fuel prices and a weak yen,” Izumi said in Tokyo. “It’s hard to stop fuel prices from rising, but the question is whether you ignore a weaker yen.”
In response, former banker Kishida said current policies should be maintained, while reiterating warnings about the harm high interest rates could do to small businesses and homeowners. Kishida has so far supported the policies of Bank of Japan Governor Haruhiko Kuroda, including in a statement on Monday.
“Monetary policy has a powerful effect on the exchange rate,” Kishida said during the debate. “But it also affects MSMEs and mortgage rates. In other words, it has a powerful effect on the economy as a whole.”
Anxiety over inflation has created a level of uncertainty in the election, which the ruling Liberal Democratic Party looked certain to win by a wide margin a few weeks ago. While the upper house has less power, a convincing victory would allow Kishida to delay another electoral test for up to three years and avoid the “revolving door” that many of his predecessors passed.
Japan’s divisive and unpopular opposition has long sought to capitalize on the LDP’s struggle. A poll conducted by the Nikkei newspaper from June 17 to 19 found that 43 percent of respondents planned to vote for the Liberal Democratic Party, followed by the Japan Innovation Party at 10 percent and the CDP at 8 percent. The LDP’s coalition partner Komeito received 6 percent.
Kishida is also set to take on defense policy after Russia’s war in Ukraine heightened Japan’s fears of a similar Chinese fight for territory in Asia. In response, the once-dovish Kishida has pledged to significantly strengthen the country’s defense and increase spending accordingly.
The LDP’s policy platform calls for keeping in mind the NATO target of 2 percent of GDP and for the country to acquire the capability to respond to missile strikes. Still, Kishida said on Tuesday that the government has yet to decide on a military spending target. CDP’s policies are closely related to Japan’s postwar pacifist tradition.
It remains to be seen how much money can be made available in the world’s most indebted country, or how it will be spent. Four months after the Russian attack, polls show voters’ priorities are gradually shifting from national security to wallet-friendly issues like revitalizing the economy.
The government has urged consumers to cut electricity consumption this summer amid a supply crunch and soaring costs, with the Liberal Democrats vowing to restart nuclear reactors after they were declared safe. Resistance to atomic energy is waning, even in a country traumatized by the 2011 Fukushima nuclear disaster.
In contrast, the opposition CDP has vowed to move towards a society without nuclear energy.
“We cannot rely on one energy source,” Kishida said. “An important factor is nuclear energy. After confirming that it is safe, I want to go ahead with the restart.”