Sanae Takaichi Pledges Nimble Response to Market Volatility

Prime Minister Sanae Takaichi will pledge a "nimble response" to unexpected economic and financial market developments during a policy speech on October 5, marking the first day of an extraordinary parliamentary session. According to a draft speech reviewed by the Nikkei, Takaichi intends to explain that the government will determine the size of annual debt issuance based on interest rate developments.

This commitment follows a period of negative market reactions to Takaichi's spending plans, which have driven benchmark government bond yields up for five consecutive quarters. Investors have expressed concern over Japan's worsening finances, particularly regarding the funding of increased defense spending and a proposed temporary suspension of a levy on food items.

To address these concerns, the administration has ruled out a supplementary budget and aims to cap new bond issuance at 40 trillion yen for the next fiscal year. Takaichi stated that when the economy and markets make unexpected moves, the government will "analyse the impact and respond nimbly."