Bessent Says Abenomics Is Ending as BOJ September Rate-Hike Odds Hit 88%

US Treasury Secretary Scott Bessent reiterated the need for the Bank of Japan to normalize monetary policy, while renewed yen weakness helped drive market-implied odds of a BOJ rate increase in September to nearly 90%.

Bloomberg reported on August 30 that Bessent, in an interview a day earlier, was asked whether the BOJ should consider consecutive rate hikes to respond to the yen’s decline. “I’m not going to tell them what to do,” he said, adding that he expects BOJ Governor Kazuo Ueda to “do the right thing” on monetary policy.

Bessent also signaled that Japan’s long period of easy monetary policy needs to change. “I think Abenomics, which was a reflation policy, has probably reached its end,” he said.

Bessent is set to meet Ueda on the sidelines of a two-day Group of 20 finance ministers’ meeting beginning August 31 in Asheville, North Carolina.

The remarks came as the yen again weakened beyond 160 per dollar. The dollar-yen exchange rate rose past the 160 level about a month after Japan intervened in the foreign-exchange market to support its currency. At the time, the US joined the effort, marking the first joint currency-market intervention by the two countries since 1998.

Bessent has repeatedly said the BOJ needs to continue moving toward policy normalization. In his view, as Japan normalizes rates, the yen can return to a more appropriate level.

Since the joint US-Japan intervention, financial markets have increasingly bet that the BOJ could raise rates faster than previously expected. Overnight index swaps on the morning of August 30 showed an 88% chance of a rate increase at the BOJ’s September meeting.

Attention is now turning to whether Bessent and Ueda will discuss Japan’s monetary-policy normalization and the yen’s weakness during their meeting at the G20 gathering.