Japan’s deepening political woes cloud budget, rate hike timing

By Takaya Yamaguchi and Leika Kihara

TOKYO (Reuters) -Japan’s deepening political uncertainty risks prolonging policy paralysis that could affect the drafting of next year’s budget and the timing of the central bank’s next interest rate hike, analysts say, clouding the outlook for the fragile economy.

Prime Minister Shigeru Ishiba is facing increased calls from within his ruling Liberal Democratic Party (LDP) to step down and take responsibility for the party’s huge defeat in an upper house election in July and a lower house poll last year.

While Ishiba has denied he has any plans to resign, his fading support has triggered inevitable questions about his political future and analysts say a leadership change would likely have implications for the outlook for fiscal and monetary policy.