Japan PM Sanae Takaichi's growth blueprint lifts bond yields and dents popularity

Prime Minister Sanae Takaichi unveiled her first economic policy blueprint on 21 July, pledging more than ¥370 trillion in public‑private investment in strategic sectors through fiscal 2040. The plan calls for coordination with the Bank of Japan (BOJ) while reaffirming the central bank’s legal independence, adding a footnote to protect that autonomy. Market participants noted government‑bond yields climbing to multi‑decade highs as the draft was repeatedly revised to soften language that could be seen as pressuring the BOJ to delay interest‑rate hikes.

The extended Diet session, which now runs until 25 July, also saw the passage of several controversial bills, including a revision of the Imperial House Law limiting women’s succession rights. Polls released after the votes show Takaichi’s approval falling to roughly 49‑53 % from about 60 % in June, with voters citing concerns over inflation and the new laws. The combination of economic uncertainty and legislative controversy marks a challenging early period for the newly appointed first female prime minister of Japan.

The blueprint’s emphasis on growth over fiscal consolidation, together with the market reaction to perceived political influence on monetary policy, signals a pivotal moment for Japan’s economic strategy and domestic political support.