Global Economy and Finance Weekly Watch

Following an LDP landslide election victory, Mizuho analyzes the impact of Prime Minister Takaichi's fiscal plans and a hawkish BOJ stance on the Japanese economy. The report predicts a 1.0% terminal policy rate and warns of potential market disruption from unfunded consumption tax cuts.

Key Takeaways

• 1.The Liberal Democratic Party (LDP) secured a historic landslide victory in the Lower House election, winning 316 seats and obtaining a two-thirds majority.
• 2.The Bank of Japan (BOJ) maintains a hawkish tone, with Board members considering faster tightening due to yen weakness and low real interest rates.
• 3.Prime Minister Takaichi's plan to eliminate the consumption tax on food for two years poses a risk to fiscal discipline and could trigger market volatility.

Table of Contents

• Review of key indicators and events
• Economic indicators
• BOJ-related events
• Politics
• Economic outlook (as of 9 February)

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