The US Treasury secretary discussed Japan’s fiscal and monetary policies in a Reuters interview. The United States’ concerns have become more explicit, and the remarks could affect next fiscal year’s budget formulation and the Bank of Japan’s rate-hike decision.
US Treasury Secretary Bessent discussed Japan’s fiscal and monetary policies in a Reuters interview. While he rated past policies aimed at overcoming deflation as a “success,” he also suggested that Japan should take a cautious stance toward its current fiscal expansion.
Several Japanese government officials said the United States had conveyed concerns about the fiscal policies advocated by Prime Minister Takaichi Sanae (高市早苗). Some have pointed to differences of view over the sustainability of tax cuts on consumption and other issues as the background, and debate over fiscal soundness is expected to intensify.
Bessent’s remarks could also affect the Bank of Japan’s monetary policy. In response to a question about whether the Bank of Japan should consider an additional rate hike, Governor Ueda (植田) was reported to have indicated support for a rate hike by saying that he would “make the right decision.”
The Bank of Japan’s next meeting is scheduled for 17–18 September, and attention is focused on the impact of fiscal expansion on long-term interest rates and market expectations for interest rates. Alongside the full-scale preparation of next fiscal year’s budget, the course of policy decisions will be a key focus.