U.S. Treasury Chief Urges Japan to End Reflationary Policy

Asheville, North Carolina, Sept. 1 (Jiji Press)–U.S. Treasury Secretary Scott Bessent said Tuesday that he has called on Japan to end its reflationary policy, such as its massive monetary easing aimed at pulling the country out of deflation. While referring to “a tremendous success in Abenomics,” or the late former Prime Minister Shinzo Abe’s reflationary policy mix featuring monetary easing and aggressive fiscal spending, Bessent said that Japan “should actually let that run and stop the reflation.” “I think that Japan can sit back and enjoy the benefits” of Abenomics, he told a press conference after a two-day meeting of Group of 20 finance ministers and central bank chiefs ended the same day in Asheville, North Carolina. Bessent held talks with Japanese Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda on the sidelines of the G20 meeting. In his meeting with Ueda on Sunday, Bessent “expressed strong support for Japan’s decisive market and monetary steps to address the substantial undervaluation of the yen,” according to a readout published Tuesday by the Treasury Department. He also “emphasized the importance of sound formulation and communication of monetary policy to anchor inflation expectations and avoid excess exchange rate volatility.” Japanese and U.S. monetary authorities conducted their first concerted yen-buying market intervention in roughly 28 years in late July to stem the yen’s excessive depreciation and soaring long-term interest rates. In his meeting with the BOJ governor, Bessent stressed the importance of close coordination between the two countries, while noting “the role of yen weakness in contributing to domestic inflationary pressures in Japan.” In Tokyo interdealer trading Tuesday, the yield on the most recent 10-year Japanese government bond issue, regarded as the country’s key long-term interest rate, exceeded 3 pct to hit a 30-year high. Regarding the rise in the yield, Bessent told reporters Tuesday that Japanese authorities were taking the right measures. END [Copyright The Jiji Press, Ltd.]