Japan finance minister tells Bessent PM Takaichi is not a reflationist

Japanese Finance Minister Satsuki Katayama ​said on Tuesday she ‌made it ​clear to US Treasury Secretary Scott Bessent during a phone call last week that Prime Minister Sanae ‌Takaichi is not a reflationist. "I explained that Prime Minister Takaichi is not a reflationist. As I have repeatedly explained on various occasions recently, I noted that this ‌is something she herself has said," Katayama said.

She added she would maintain ‌close communication with the US Treasury and continue working with Washington to ensure orderly currency markets. Katayama's comments reflect the Takaichi administration's efforts to dispel market speculation that the prime minister favours reflationary ⁠policies, ​as she pursues ⁠what she describes as a "responsible and proactive" fiscal agenda.

Economy Minister Minoru Kiuchi – widely regarded as reflationist ⁠due to his past caution towards interest rate hikes and association with a lawmakers' group ​for expansionary spending – said last week that the phase of Abenomics-style reflation policies, ⁠with monetary easing and agile fiscal spending, was over. The remarks from the ministers in charge ⁠of ​the economy come after Bessent suggested that Japan's priority should be fighting inflation rather than stimulating growth, signalling concern about what he sees as lingering ⁠elements of Abenomics in Takaichi's policies and among her political allies.

Markets have viewed ⁠Takaichi's growth agenda ⁠with caution, seeing her spending plans, a temporary food sales tax cut and ties to policy advisors associated with Abenomics ‌as potentially reflationary.