By bizn_fun 
But it’s more complicated than that.
When Takaichi came into office in October, government bond yields – effectively the interest Japan pays to borrow money – jumped.
That’s a major concern for investors because of Japan’s steep public debt. More spending and lower taxes – which Takaichi has been promising – means the government needs to borrow more money.
Japan’s bond market is one of the largest in the world, so even small changes in Tokyo can ripple across global markets, affecting borrowing costs, investment decisions, and currencies.
Investors are also watching interest rates because the Bank of Japan is trying to move away from decades of ultra-low rates to control inflation.
The cost of rice, for example, doubled in 2025. Rising prices are a shock for a country that has become accustomed to stable or falling prices.
This was central to the message that powered Takaichi’s rise: voters feel poorer and prices feel higher. After all, it was one of the issues that cost her predecessor his job.
Takaichi’s proposed tax cuts may ease the pain for households in the short term.
But Keiichiro Kobayashi, professor of economics at Keio University, warns that this is a dangerous path: “An increase in spending would just stimulate inflation and increase the cost of living.”
Instead, he says, the government should allow the Bank of Japan to continue raising interest rates to fight inflation, while tightening government spending, which would also satisfy investors.
Because Japan is less attractive to foreign investors when interest rates are low and government spending is high, that reduces demand for the currency and weakens it.
A weaker yen pushes up the cost of imports, especially energy and food, but it can help exporters competing with cheaper Chinese goods.
It’s an incredibly delicate balancing act that Takaichi cannot escape if she wants the growth she has promised.
But the challenges go beyond markets.
A weak yen also changes how Japanese people feel about living there – it makes property and overseas goods harder to afford, while making the country cheaper and more attractive for foreign visitors.
The tourism boom has brought with it money, but also overcrowding and a growing backlash against foreigners in some places.