At a press conference following the G20, U.S. Treasury Secretary Bessent called on Japan to “end its reflationary policies.” The article examines the issues surrounding BOJ policy and the Takaichi administration’s fiscal management.
The phrase “stop the reflation” was explicitly used by Bessent at a press conference following the G20, rather than being the result of a mistranslation by the Japanese media. However, it has been noted that “reflation” in this context may encompass broad demand stimulus through both monetary and fiscal policy, rather than referring only to the policies of Japan’s reflation advocates.
Japan’s reflationary policies previously centered on the BOJ’s QQE under Governor Kuroda, leading to increasingly expansionary monetary easing and ultimately the introduction of negative interest rates in 2016. In 2024, however, Governor Ueda said that easing had “fulfilled its role” and moved to return to conventional monetary policy, reviewing YCC and negative interest rates. Against this backdrop, the article asks why Bessent is criticizing reflation again now.
It has been explained that “reflation” can refer broadly to expansionary monetary and fiscal policy, suggesting that it may be used here in a broader sense than the term generally conveys in Japanese. The article also presents interpretations based on usage in the English-speaking world, including the IMF’s treatment of Abenomics as the “three arrows.”
According to Reuters, Bessent’s argument was not simply a criticism of the BOJ, but implied an end to outdated thinking on fiscal stimulus. Government officials reportedly understood it as a message urging the Takaichi administration to avoid excessive fiscal expansion. The article interprets the true meaning of “stop the reflation” as a political message, rather than one based on Japan’s perception of deflation and meaning “end the policies of the deflationary era.”