As the Takaichi administration moves quickly to dispel its image as a reflationist administration, it has repeatedly explained, including after the Japan-US summit meeting, that its “responsible, proactive fiscal policy” differs from reflationary policy. Some suggest that the aim is to deflect pressure from the US administration.
After the Japan-US summit meeting, Finance Minister Katayama (片山) emphasized that the prime minister’s economic policies did not constitute reflationary policy, while Kiuchi (城内), who is responsible for economic and fiscal policy, repeated the same explanation. The Takaichi administration again demonstrated its stance of overturning the image of a reflationist administration seeking moderate price increases and putting forward responsible, proactive fiscal policy.
The US side is concerned about the effects of yen depreciation and rising Japanese interest rates on the US economy and is said to be taking a more interventionist stance toward Japan’s fiscal and monetary policy. It was reported that US Treasury Secretary Scott Bessent warned Japan that it should abandon reflationary policy.
President Trump was said to have remarked at the Japan-US summit meeting on the impact of yen depreciation, and market participants are watching future developments in foreign exchange and interest rates.