Bessent Backs Ueda's Independence as Abenomics Legacy Comes to a Close

US Treasury Secretary Scott Bessent recently praised Japan's Abenomics legacy, suggesting that the country has likely reached the end of its reflationary program. Launched by former Prime Minister Shinzo Abe over a decade ago, Abenomics aimed to break Japan out of its deflationary trap through aggressive monetary easing, fiscal stimulus, and structural reforms.

Bessent's comments came ahead of his meeting with Bank of Japan Governor Kazuo Ueda at the G20 finance ministers' gathering in Asheville, North Carolina. Markets are already betting on a possible BOJ rate hike in September, with traders pricing an 80% to 90% probability of such an event.

Bessent described Ueda as 'an underrated, savvy market operator,' a nod to the BOJ governor's independence in monetary policy decisions. This assessment aligns with the shift in Japan's political landscape, where Prime Minister Sanae Takaichi has signaled a willingness to reduce government intervention in monetary affairs.

The yen has experienced significant fluctuations over the past few weeks, recently trading at around 160 per dollar after nearing 40-year lows of 164. Bessent characterized these movements as 'pretty well contained' rather than disorderly.