Japan PM Fumio Kishida to step down in September amid political scandals, rising prices

Japanese Prime Minister Fumio Kishida will step down as the ruling party leader in September, according to media reports. Kishida will end a three-year term characterised by rising prices and political scandals.

Kishida will reportedly not seek a re-election as the Liberal Democratic Party (LDP) leader, Japanese media including public broadcaster NHK cited senior administration staff.

It must be mentioned that the decision taken by the Japanese prime minister will initiate a contest to replace Kishida as the leader of the world's fourth-biggest economy.

The successor the LDP chooses could face increases in living costs, escalating geopolitical tensions, and the potential return of Donald Trump as US President next year.

As Japan's eighth-longest serving post-war leader, Kishida led the country out of the Covid pandemic. He also appointed Kazuo Ueda, an academic tasked with ending his predecessor’s radical monetary stimulus, to head the Bank of Japan (BOJ).

The BOJ unexpectedly raised interest rates in July, contributing to stock market instability and sending the yen sharply lower.

Shoki Omori, chief Japan desk strategist, Mizuho Securities, Tokyo said, "If the "reporting is accurate, we should expect tighter policy or neutral but slightly tighter fiscal and monetary conditions depending on the candidate", further adding, that risk-assets, particularly equities, will likely be hit the most.