US Treasury official: Full confidence in Japan's fiscal discipline

U.S. Treasury Deputy Secretary for International Affairs Eileen Brownie, in an exclusive interview on Friday, praised Japan's efforts to exit reflation policies, saying Japan's "inflation is on a benign trajectory." Speaking on the sidelines of the IMF annual meetings in Bangkok, Brownie said: "Japan's current inflation trend is positive, a number of reforms have been implemented and are continuing to advance, and the fiscal discipline that the Prime Minister has articulated to the Japanese people deserves recognition. We are optimistic about the Prime Minister's policies and have full confidence in the Japanese Prime Minister and the Japanese government." Regarding Bessent's earlier remarks on reflation policy, Brownie said: "I don't think Secretary Bessent intends to set monetary policy for the Bank of Japan. The series of reforms Japan has pursued, and the economic progress it has made in escaping prolonged deflation, are what encourage and earn his recognition." Brownie said Japan is the largest foreign holder of U.S. debt, and that stability in Japan's foreign exchange market is crucial to the United States. Asked about U.S. fiscal consolidation measures, she said: "There are two paths to reducing the debt-to-GDP ratio: one is relying on economic growth to absorb debt, and the other is cutting spending to carry out fiscal consolidation. We are pursuing both paths." On the current regional economic situation, Brownie said: "Leverage levels in Asian countries are not as high as during the Asian financial crisis, and compared with back then, Asian markets and global markets have greater resilience." She added: "Countries have relatively strong resilience against the ongoing conflict in the Strait of Hormuz."