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US Treasury Secretary Scott Bessent just offered what amounts to a eulogy for one of the most consequential economic experiments of the 21st century. Speaking on August 30, Bessent said Japan has likely reached the conclusion of Abenomics, the reflationary program launched by the late Prime Minister Shinzo Abe over a decade ago. His advice to Tokyo: don’t fight it, let the transition happen organically.
The comments landed a day before Bessent is scheduled to sit down with Bank of Japan Governor Kazuo Ueda at the G20 finance ministers’ meeting in Asheville, North Carolina, running August 31 to September 1. Markets are already betting heavily on what comes next, with traders pricing an 80% to 90% probability of a BOJ rate hike in September.
Bessent’s quiet confidence in Ueda
Bessent didn’t just comment on the macro picture. He went out of his way to praise Ueda personally, calling the BOJ governor an “underrated, savvy market operator.” That’s a notable endorsement from a Treasury Secretary who has consistently advocated for the BOJ to make rate decisions independently of political pressure.
The praise aligns with a broader shift in Japan’s political landscape. Prime Minister Sanae Takaichi has signaled a willingness to reduce government intervention in monetary affairs, a departure from the heavy-handed coordination that defined the Abe era. Bessent framed this as a positive development, arguing that with less aggressive intervention from Tokyo, the benefits of Abenomics can flourish on their own terms.
This isn’t the first time Bessent has signaled his stance on BOJ independence. Prior communications from the Treasury Secretary have consistently pushed back against the notion that Washington should dictate Japan’s monetary trajectory. The Asheville meeting gives both sides a chance to coordinate messaging without appearing to coordinate policy.
The yen’s wild ride
Bessent’s comments carry extra weight given the turbulence in currency markets over the past several weeks. The yen recently traded at approximately 160 per dollar, a recovery of sorts after nearing 40-year lows of 164 earlier in the summer. Bessent described those fluctuations as “pretty well contained” rather than disorderly.
In late July 2026, the US and Japan conducted a rare joint currency intervention to stabilize the yen, a move that itself generated significant market volatility.
What Abenomics actually was, and why its ending matters
For those who didn’t spend the 2010s tracking Japanese monetary policy, Abenomics was a three-pronged strategy: aggressive monetary easing, fiscal stimulus, and structural reforms. The idea was to break Japan out of its deflationary trap through sheer policy force. The BOJ bought government bonds, equities, and even ETFs at an unprecedented scale, while the government ran massive fiscal deficits.
Now, with inflation running above the BOJ’s 2% target and wage growth finally showing signs of durability, the rationale for emergency-era monetary policy has evaporated. Bessent’s assessment that Abenomics has reached its natural endpoint is less a bold prediction than an acknowledgment of what most economists already see.
Global implications of a BOJ policy shift
A BOJ rate hike in September would send ripples well beyond Tokyo. Japanese institutional investors, particularly pension funds and insurance companies, are among the world’s largest holders of foreign assets, including US Treasuries. When domestic yields rise, the incentive to repatriate capital increases, which can put upward pressure on the yen and downward pressure on foreign bond markets.
This dynamic played out earlier in 2024 when BOJ policy adjustments contributed to volatility in global bond markets.
Bessent’s willingness to publicly encourage BOJ independence suggests he’s calculated that the benefits of a stronger yen, namely reduced currency friction in trade relations, outweigh the risks of higher US yields. When the Treasury Secretary of the United States publicly praises a foreign central banker and declares a decade-long economic program complete, the subtext tends to be as important as the text. In this case, the subtext reads like a green light for Ueda to hike.
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