Japan's ruling coalition has lost its majority in the country's upper house, but Prime Minister Shigeru Ishiba has said he has no plans to quit.

CNBC's Martin Soong, Chery Kang, and Kaori Enjoji discuss how the ruling coalition's defeat in Japan's upper house election complicates policy formation in the country, including the Bank of Japan's aim to normalize monetary policy.

Ishiba had announced his intention to stay on to tackle pressing challenges, including tariff talks with US, without creating a political vacuum

Japan's upper house election on Sunday dealt a big blow to the ruling coalition and sets markets up for possible policy paralysis and a bigger fiscal deficit, much of which is already priced in, analysts said.

The reports come after Trump announced a trade deal with Japan, and days after Ishiba’s governing coalition lost its majority in the country’s upper house.

TOKYO (AP) — Japanese Prime Minister Shigeru Ishiba said Monday he will stay in office to tackle challenges such as rising prices and high U.S. tariffs after a weekend election defeat left his coalition with a minority in both parliamentary chambers and triggered calls for his resignation.

The loss is another blow to the coalition led by Prime Minister Shigeru Ishiba, who could face calls from his party to step down

HSBC said that the directionality of JPY rates was likely to be positively correlated with the degree of policy uncertainty after Japan’s ruling coalition suffered a loss on Sunday.