Japanese Prime Minister Fumio Kishida has abandoned his bid for the next leader of the Liberal Democratic Party, signaling a change in leadership in Japan. RBC Wealth Management believes that Japan will welcome its third leader since the resignation of former Prime Minister Shinzo Abe in 2020. Based on local political developments, as well as comments from Bank of Japan Deputy Governor Masayoshi Amamiya on a cautious view of interest rates, the likelihood of the Bank of Japan raising rates in September or October is slim. The bank reiterated that due to Japan's end of deflation, ongoing corporate restructuring and reforms, as well as continued domestic demand recovery, these long-term factors driving the Japanese stock market remain unchanged, maintaining a positive outlook on Japanese stocks. RBC Wealth Management pointed out that voters are frustrated with Fumio Kishida's involvement in a bribery scandal, persistent inflation, and a sharp decline in the yen. Public support for Kishida has been consistently low, and the Japanese stock market experienced its biggest drop in over 30 years in early August. Despite Japan's second-quarter economic growth of 3.1% on an annualized basis, well above market expectations, reversing the contraction in the first quarter, and a rise in private consumption spending, recent stock market volatility and political uncertainty have reduced the likelihood of the Bank of Japan raising rates again in the short term.