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Japanese Prime Minister Shigeru Ishiba is expected to step down to prevent a split within his ruling party, Japanese media reported Sunday, raising new political uncertainty in the world’s fourth-largest economy. A spokesperson for the Prime Minister’s Office did not respond immediately to requests for comment from Reuters, but the government announced that Ishiba would hold a press conference at 6 p.m. local time (9 a.m. GMT).
Since taking office last September, Ishiba’s coalition has lost its majority in both chambers of parliament amid public frustration over rising living costs. Despite internal calls within the Liberal Democratic Party for him to resign and take responsibility for the July loss in the upper house, he has refused to step down. Last week’s political turmoil triggered a sell-off in the yen and Japanese government bonds, with the 30-year bond yield reaching a record high on Wednesday.
Speculation about Ishiba’s future intensified when the LDP scheduled a vote for Monday on whether to hold an extraordinary leadership election. While the political deadlock could further harm an economy already affected by U.S. tariffs, markets are more focused on the potential replacement of Ishiba by a leader advocating for looser fiscal and monetary policies, such as Sanae Takaichi, who has criticized the Bank of Japan’s interest rate hikes.
Ishiba narrowly won the LDP leadership runoff against Takaichi. If he resigns, his final act as Prime Minister will have been to finalize a trade agreement with the United States last week, under which Japan committed to investing $550 billion in exchange for reduced tariffs from President Donald Trump on key Japanese autos.
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