Despite calls from within the LDP to take responsibility and resign, Ishiba had until now resisted, instead prioritising negotiations with Washington on trade tariffs that have weighed heavily on Japan’s automotive sector.

Attention has turned to who might succeed Ishiba, if he resigns as the PM too. Fiscal dove Sanae Takaichi, who narrowly lost to Ishiba in last year’s party leadership run-off, is seen as a strong contender. She has been critical of the Bank of Japan’s rate hikes and has argued for more expansionary fiscal policies.

Another name floated is Shinjiro Koizumi, the farm minister tasked with containing soaring food prices and son of former Prime Minister Junichiro Koizumi.

“Given the political pressure mounting on Ishiba after the LDP’s repeated election losses, his resignation was inevitable,” Kazutaka Maeda, economist at Meiji Yasuda Research Institute, told Reuters. “Koizumi and Takaichi are seen as the most likely candidates. While Koizumi is not expected to bring major changes, Takaichi’s stance on expansionary fiscal policy and her cautious approach to interest rate hikes could draw scrutiny from financial markets,” Maeda said.

If he steps down as PM, one of Ishiba’s final moves as premier would be sealing a trade deal with Washington last week. Under the agreement, Japan committed to $550 billion in investments in exchange for US President Donald Trump lowering tariffs on Japan’s key auto exports.

The heightened political uncertainty has already rippled through financial markets. The yen and Japanese government bonds came under pressure last week, with the 30-year bond yield hitting a record high on Wednesday, according to Reuters.

Speculation over Ishiba’s departure grew after the LDP scheduled a Monday vote to decide whether to hold an emergency leadership election.-Agencies