This weekend’s Japanese election is shaping up to be one of the most consequential in years. As Sanae Takaichi, newly installed leader of the ruling Liberal Democratic Party, seeks to cement her mandate, government bond yields and the yen have been moving in opposite directions amid headlines warning of plans to open the fiscal floodgates.
But are markets really responding to fears of runaway spending, or to the reality that Japan is finally emerging from decades of deflation? Capital Economics’ Head of Asia-Pacific, Marcel Thieliant, and Head of Asia-Pacific Markets, Thomas Mathews, join the show to unpack what the return of inflation means for the Japanese economy, for the Bank of Japan, for government bonds and for the outcome of this weekend’s vote.
Also on the show: a new US-India deal to slash eye-watering reciprocal tariff rates is the latest in a flurry of trade agreements from the Modi administration. Shilan Shah, our India research lead, explains what these deals mean for India’s economic outlook – and whether the country can truly wean itself off Russian oil.
Read our key analysis about the return of inflation to Japan's economy.
For Capital Economics clients: Japan Drop-In: Takaichi’s election gamble – Fiscal risks, market consequences
