Japanese Prime Minister Sanae Takaichi has emerged from a landslide election victory with a strengthened mandate to pursue tax cuts and fiscal stimulus, including her flagship pledge to suspend the 8% food sales tax for two years, Reuters reported.

Axar.az reports her Liberal Democratic Party secured a supermajority, sidelining both opposition parties and fiscal conservatives within the LDP.

Markets reacted nervously to the lack of clarity over how the plan would be funded, triggering a sell-off in government bonds and renewed pressure on the yen, despite a post-election rebound in stocks. The proposed tax suspension would cost about 5 trillion yen annually, and while Takaichi has ruled out issuing new debt, she has yet to specify alternative revenue sources.

Analysts warn that prolonged uncertainty could reignite market volatility, raise borrowing costs, weaken the yen, and undermine the intended relief for households. With Japan carrying the highest public debt burden in the developed world, markets may pose the biggest challenge to Takaichi’s expansionary agenda despite her decisive political mandate.