Japan Abandons Abenomics Reflation Policy Amid Rising Borrowing Costs

Japan has shifted away from its reflationary policy of Abenomics, according to Growth Strategy Minister Minoru Kiuchi. The country has exited a period of aggressive monetary stimulus and flexible spending, entering a phase where prices are gently climbing and borrowing costs are rising.

Kiuchi emphasized that Japan still hasn't fully escaped deflation, but the shift in policy is significant. Abenomics was characterized by heavy monetary stimulus and agile fiscal policy, whereas the current approach is more moderate. Kiuchi's comments were made during a week of renewed yen softness and rising government bond yields.

The remarks landed after Finance Minister Satsuki Katayama said US President Donald Trump expressed concern about the yen during a meeting with Prime Minister Sanae Takaichi, prompting a brief strengthening of the currency to 158.33 per dollar. However, the yen remains near levels that could prompt Tokyo to intervene.