London ( CNN ) -- Hopes that this weekend 's Japanese election will deliver a major policy shift towards delivering higher growth and inflation have given the country 's financial markets a long-overdue shot in the arm . Stock markets have rallied , up 10 % on the month to their highest levels since April . The yen , which was recently within touching distance of its post-war high , causing agony for Japan 's manufacturers , has eased to eight-month lows . And Japan 's long-term interest rates have fallen to their lowest levels since 2003 . Optimism hangs on the electoral rhetoric of LDP leader Shinzo Abe , odds-on to be Japan 's next prime minister . Exasperated by Japan 's two lost decades and persistent deflation , Abe has demanded aggressive action from Japan 's central bank , calling for it to generate 2 % inflation and do whatever necessary -- including buying an `` unlimited '' amount of government bonds -- to hit that target . And harking back to days gone by , Abe has called for new budgetary stimulus too , including extra public works spending . But could an Abe-led government really snap Japan out of its seemingly interminable economic malaise ? Of course , campaigning and governing are two very different things . And , given the perilous state of Japan 's public finances , the next government will have precious little room for maneuver to boost public investment . Dangerous waters : Behind the islands dispute . Indeed , it will have countless unpalatable budgetary decisions to make , not least making the social security system affordable given Japan 's rapidly aging population . So , in practice , fiscal policy is unlikely to be able to provide meaningful stimulus over the term of the next government . That means that the onus will be on monetary policy to boost growth and inflation . Following rebuttals from present Bank of Japan Governor Shirakawa , Abe recently toned down his attacks on the central bank . But the LDP manifesto maintained Abe 's commitment to a 2 % inflation target , with legislative action to be considered to force the Bank of Japan 's hand if it does not co-operate . Of course , whether an LDP-led government can amend laws related to the central bank , or will in large part depend on the election outcome . But even if Abe secures a comfortable majority in the Lower House , given its lack of control of the Upper House , it might struggle to secure the working majorities it will need in the Diet to pass legislation comfortably . Certainly , a government reliant on a number of parties to pass legislation may mean that complicated reforms to shake up the Bank of Japan are likely to remain more of a threat than a reality . The opinions expressed in this commentary are solely those of Chris Scicluna .
Former PM Shinzo Abe is campaigning on joint monetary and fiscal stimulus to end persistent deflation . Abe has threatened legislative action if the Central Bank of Japan does n't commit to a 2 % inflation target . Given political constraints , Abe is unlikely to secure the working majorities needed to pass such legislation , Scicluna writes .