Japan's Shinzo Abe calls snap elections, seeks constitutional reform

The decision is largely seen as aimed at taking advantage of Abe's recently improved support ratings and opposition disarray.

"By holding the election under these circumstances, I want to ask the public about [Japan's] responses to North Korea", Abe emphasized.

According to the same Kyodo News poll, almost 80 percent of those surveyed said they are not convinced of the government's account of the scandals involving school operators Kake Gakuen and Moritomo Gakuen - the first one involving allegations of favoritism toward a university run by Abe's longtime friend, and the other over the sale of a government-owned tract of land at a questionable discount for construction of an elementary school in Osaka that was to have the prime minister's wife as "honorary principal".

Under this scenario, which was more or less the consensus expectation before the last couple of days, there was a possible window for the BOJ to exit by end-2018/early 2019-if fiscal policy stays accommodative (by Abe delaying the tax hike once again), monetary policy has the flexibility to change.

The prime minister, whose ratings have risen to about 50% from about 30% in July, makes the announcement amid threats from North Korea's government, who launched two missiles over Japan's northern island of Hokkaido in recent weeks.


Abe announced that he meant to dissolve parliament's lower house on Thursday, with local media reports suggesting that a new general election will be held on October 22nd.

Popular Tokyo governor Yuriko Koike announced on Monday she would lead a new political party into national elections expected next month, hoping to repeat her success in local polls.

Among the priorities of Abe's government is the removal of Japan's fiscal deficit by 2020 through an increase in a consumption tax.

Koike, an Arabic-speaking former news anchor who was also briefly the country's first-ever female defense minister, became the mayor of Tokyo a year ago.

"But I would suspect a lot of election related stuff is already priced in and the yen would have limited downside", said Kyosuke Suzuki, director of foreign exchange at Societe Generale in Tokyo.


Abe will also tell his cabinet to compile a JPY2 trillion (US$17.8 billion) economic package by year-end, composed mostly of spending on child care and education, to cover the three years from April 2018 until sales tax revenue kicks in, the Yomiuri newspaper reported on Monday.

Abe could also profit from disarray in the main opposition Democratic Party, which is now trailing the LDP.

At the press conference, the prime minster also raised the issue of North Korea's nuclear and missile development.

The Nikkei poll was far more positive for Mr Abe's prospects than a Kyodo news agency survey that put his LDP on 27.7%, with 42.2% undecided.

Acknowledging that it would be a very hard election, Mr Abe added: "I am ready for that".



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