Takaichi's policies have proven contentious given the huge size of Japan's public debt.
Her decision to pursue a two-year tax cut on food items sparked a bond sell-off as well as criticism from the US, putting her under pressure to heed market calls for fiscal discipline.
Kiuchi said after the announcement of the cabinet line-up that he would strive towards achieving both a strong economy and fiscal sustainability.
"We won't engage in wanton fiscal expansion," he said on Thursday.
In her first reshuffle since taking office in October 2025, Takaichi, however, also retained as finance minister Satsuki Katayama, a former finance ministry bureaucrat regarded as having a conservative stance towards fiscal policy.
That reappointment is likely to be welcomed by bond markets wary of Takaichi's plans to increase government spending, which in turn could boost debt issuance.
Katayama played a key role negotiating with US Treasury Secretary Scott Bessent on a rare joint US-Japan yen intervention in July, an effort that underscored the countries' close co-operation and her reappointment underscores continuity in foreign exchange policy.
Other key ministers, including some of her competitors in 2025's race to lead the ruling party, such as Foreign Minister Toshimitsu Motegi and Defence Minister Shinjiro Koizumi, remained in their posts.
The reshuffle was aimed mostly at having the Japan Innovation Party, Takaichi's ruling Liberal Democratic Party's coalition partner, share responsibility on policymaking by joining the cabinet.
The premier appointed Hiroshi Nakatsuka from the party as minister in charge of deregulation.
Of the 18 minister posts, eight were filled by incumbents including trade minister Ryosei Akazawa, who oversees Japan's trade negotiations with the US.
The yield on the benchmark 10-year Japanese government bond hit three-decade highs this week on concern Takaichi's big spending plans could add to Japan's public debt, which, at twice the size of its economy, is the largest among advanced nations.
But with households smarting from rising costs of living, she risks hurting her approval ratings by backing down on her pledge to cut tax and boost spending.
Takaichi's pledge to cap new government bond issuance about 40 trillion ($A360 billion) for the budget is already facing scrutiny after budget requests swelled to pandemic-era levels.
The cost of funding Japan's debt is increasing as the central bank raises interest rates and slows bond purchases in an effort to wean the economy off decades of massive stimulus.
The Bank of Japan is widely expected to hike its main policy rate by 25 basis points to 1.25 per cent on Friday.
