Japan's Leadership Race Sparks Debate Over Fiscal Stimulus Amid Rising Inflation

Japan's ruling party leadership race sees candidates pledging new spending measures to boost growth and counter rising inflation. Chief Cabinet Secretary Yoshimasa Hayashi, economic security minister Sanae Takaichi, and leading candidate Shinjiro Koizumi advocate for increased fiscal spending to strengthen the economy. The winner could become the next prime minister.

Japan is poised for another stimulus package as candidates in the ruling party's leadership race propose fresh spending measures to boost growth and mitigate the impact of rising inflation on households. Chief Cabinet Secretary Yoshimasa Hayashi prefers increasing spending instead of cutting taxes if the economy necessitates another package.

Economic security minister Sanae Takaichi also supports more fiscal spending, stating it will enhance job creation, household income, and consumer sentiment, and ultimately bolster tax revenues without the need for a tax hike. Leading candidate Shinjiro Koizumi plans to aid small firms and low-income households affected by rising living costs and strengthen Japan's economy amidst inflation and higher interest rates.

The winner of the Liberal Democratic Party's leadership race on September 27 will likely become the next prime minister, with analysts predicting the dissolution of parliament and a snap election. The candidates have offered limited insight on their monetary policy views, with Hayashi and Koizumi refraining from clear comments on potential interest rate hikes by the Bank of Japan.

(With inputs from agencies.)