Japan has begun recalibrating its economic messaging to reassure financial markets that Prime Minister Sanae Takaichi is not pursuing reflationary policies, Finance Minister Satsuki Katayama said in an interview with broadcaster TV Tokyo on Saturday, Oct 3.

The policy adjustment followed discussions with US Treasury Secretary Scott Bessent over whether Tokyo was communicating its fiscal direction clearly to international investors.

Katayama explained that the administration concluded in late August that it needed to address market perceptions that the Takaichi government planned an aggressive return to reflationary spending and loose monetary coordination.

Tokyo made the decision to change its public posture in late August. Officials determined that clearer explanations were necessary to prevent unhelpful market speculation and currency volatility.

Bessent indicated to Japanese officials that Takaichi’s economic policies match current economic conditions. However, the US Treasury chief questioned whether the Japanese government communicated its strategy with sufficient precision to global funds and domestic institutions.

Katayama noted that Washington’s feedback helped prompt the shift. “So we concluded around late August that we need to communicate that message more clearly to financial markets,” Katayama said, addressing market perceptions that the administration’s policies are reflationary.

Market analysts have closely tracked Takaichi’s fiscal and structural reform targets since she took office. For consumer businesses, retail operators and institutional investors across Asia, clarity on Japanese fiscal discipline dictates borrowing costs, currency stability and import price pressures.

Aggressive reflationary policies risk weakening the yen further, which raises import costs for Japanese retailers while squeezing household purchasing power.

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