In a historic appointment, Satsuki Katayama became Japan’s first female finance minister in October, taking the reins of the powerful portfolio at a moment of acute economic tension in the country.
A veteran bureaucrat and politician, she brings deep institutional knowledge. Katayama previously climbed the ranks of the Ministry of Finance (MoF), including a high-profile role in the influential Budget Bureau. That’s a rare feat for a woman in the 1980s and 1990s.
Katayama’s immediate challenge is managing newly seated Prime Minister Sanae Takaichi’s core economic priority: growth through fiscal expansion.
Takaichi is betting big on a stimulus package, estimated at over $65 billion, that aims to bolster household consumption, energize regional economies, and spur the “virtuous cycle” of sustained wage and price growth.
Such aggressive spending puts Katayama at cross-purposes with economists concerned about Japan’s financial health, however.
With the country holding the world’s highest debt-to-GDP ratio and committed to achieving a primary surplus in fiscal 2025, she must convince financial markets that the new spending is both “proactive and responsible” while working to reduce the debt-to-GDP ratio.
The external environment adds layers of complexity. The Bank of Japan held its policy rate steady, focusing on securing its 2% inflation target. But the recent economic contraction and pressure from Takaichi for cautious rate hikes create a difficult path for monetary normalization. The prime minister recently voiced concern over the yen’s “very one-sided, rapid” weakening, a development that threatens to undermine consumer purchasing power and exacerbate import costs just as the government rolls out its spending plan.
The Bank of Japan subsequently increased its benchmark interest rate to 0.75 percent.
Looking ahead, the finance minister’s success hinges on her ability to walk this policy tightrope: reconciling the MoF’s mandate for fiscal discipline with the political imperative for bold, stimulus-led growth. Katayama’s task is about execution.
