"Sanai-nomics": The 2.0 version of "Abenomics"?
Japan’s political scene has undergone sudden changes, with Sanae Takaichi’s unexpected victory drawing market attention to a potential new set of policies that may reshape the Japanese economic landscape—“Sanaenomics.”
Sanae Takaichi’s surprising election as the new president of Japan’s ruling Liberal Democratic Party signals the coming launch of a set of economic policies dubbed “Sanaenomics.”
According to information from Chasewind Trading Desk and a report released by Nomura Securities on October 5, these policies are interpreted by the market as a continuation of former Prime Minister Shinzo Abe’s “Abenomics,” but with a clear tilt toward fiscal expansion. Their far-reaching impact on Japanese monetary policy, fiscal discipline, and the yen exchange rate is drawing close attention from investors.
The report analyzes that former Minister for Economic Security Sanae Takaichi’s victory came as a surprise to most market participants, who had widely expected Shinjiro Koizumi to win. Takaichi is expected to be nominated as the next prime minister around October 15, after which she will immediately launch a series of diplomatic and domestic agendas, including a meeting with U.S. President Trump at the end of the month.
This political shift has directly shaken the foreign exchange market. Analysts expect short-term yen selling, pushing the USD/JPY exchange rate to test the key level of 150. Based on this, the bank suggests closing its USD/JPY short trade recommendation held since July 21.
The next market focus will be on key cabinet appointments in the Takaichi administration—especially the choice of finance minister—and her public stance on Bank of Japan policy independence. These signals will determine whether the yen’s weakening trend can persist and provide initial clues to the true nature of “Sanaenomics.”
“Sanaenomics”: Three Arrows, New Priorities
According to the report, the core framework of “Sanaenomics” consists of three main pillars, reminiscent of Abenomics’ “three arrows.”
First, strengthening national crisis management capabilities and promoting economic growth through investment;
Second, implementing expansionary fiscal policy, but Takaichi emphasizes raising funds by increasing tax revenue and making optimal use of existing government resources, striving to avoid additional issuance of Japanese government bonds;
Third, clarifying that the government is responsible for monetary policy, while the Bank of Japan retains autonomy in choosing specific policy tools.
The report points out, although both structures are similar, the focus is different.Abenomics prioritized aggressive monetary easing, while “Sanaenomics” seems more focused on fiscal expansion, with particular emphasis on “anti-inflationary measures,” such as increased subsidies to local governments and the introduction of refundable tax credits.
Bank of Japan Policy Path: Compatible but Uncertain
Regarding the highly watched Bank of Japan policy direction, Nomura Securities believes that Sanae Takaichi’s policy stance is compatible with that of BOJ Governor Kazuo Ueda.
The report analyzes that both Takaichi and Ueda believe Japan currently faces mainly cost-push inflation, and demand-pull inflation needed to achieve the 2% target is not yet sufficient. This position contrasts with BOJ’s internal hawkish members, Naoki Tamura and Hajime Takata.
Therefore, Nomura Securities maintains its core forecast: the BOJ will raise interest rates in January 2026, then pause for one year.
However, the report also flags potential uncertainties: If the yen continues to weaken rapidly under “Sanaenomics,” or if a stock market rally improves the economic outlook, the timing for rate hikes may be brought forward to December 2025; conversely, if the government does not wish to see rising interest rates while expanding fiscal policy, it may resist rate hikes.
Yen Outlook: Short-term Pressure, Watching 150 Level
For FX strategy, Nomura Securities expects the yen to face short-term selling pressure due to rising policy uncertainty and cooling expectations of a near-term BOJ rate hike, with USD/JPY possibly attempting to break the 150 level.
Whether yen weakness can continue will depend on Takaichi’s future public statements.
The report suggests that if she sends signals of respecting BOJ independence, the upside of USD/JPY may be limited around 150. Conversely, any comments interpreted as attempting to curb or prevent BOJ rate hikes could push the exchange rate higher.
Meanwhile, Takaichi’s focus on “anti-inflation measures” could prompt the government to tolerate rate hikes to prevent excessive yen depreciation. Investors will closely watch her remarks and BOJ Governor Ueda’s public speech on October 8.
Looking ahead, the report highlights the following key upcoming events in Japan:
- Prime Minister Nomination: Expected around October 15.
- Diplomatic Activities: The most notable is US President Trump’s planned visit to Japan from October 27 to 29. How both sides handle tariff agreements, including Japan’s $550 billion foreign direct investment (FDI) in the US, will be a market focus.
- Supplementary Budget: The new government is expected to formulate a supplementary budget for the 2025 fiscal year in late November, with specific details to reveal the actual scale of fiscal expansion.
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The above highlights are from Chasewind Trading Desk.
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