Reflationists? Who, us? Heirs to Abenomics insist it’s a thing of the past.

Reflationism is a thing of the past, Japan insists, even as bonds and the yen suggest otherwise and remain weak and under pressure. The current administration argues that it’s done with Abenomics, the policy prescription championed by Prime Minister Shinzo Abe, and is taking a different approach.

“We are no longer in the phase of Abenomics-style reflationary policy, which is based on aggressive monetary easing and proactive fiscal spending,” said Minoru Kiuchi, the minister in charge of growth strategy.

Prime Minister Sanae Takaichi has a record of making comments favoring aggressive spending and easy monetary policy, and the markets are on edge over the possibility that she might spend too much in an effort to support economic growth.

When Takaichi reshuffled the Cabinet on Sept. 17, she said the administration will “enhance communication” regarding its fiscal policy to gain market confidence.

Financial and economic officials have been more vocal about the reflationist reputation of Takaichi since the reshuffle and have made efforts to set the record straight.

“Prime Minister Takaichi always asks me to explain to people from overseas that she is not a reflationist, so we want to make sure there is no misunderstanding on that point,” Finance Minister Satsuki Katayama was quoted as saying by Bloomberg.

U.S. Treasury Secretary Scott Bessent said earlier this month that Japan achieved some success with Abenomics but that the country should now “stop the reflation.”

The Takaichi administration may have changed its stance because of both domestic and U.S. factors, Toru Suehiro, chief economist at Daiwa Securities, wrote in a report on Monday.

Domestically, keeping the market stable may be more of a priority for Takaichi now.

“If the market becomes severely unstable, it could push the administration into a tough situation where its operation would be difficult,” Suehiro wrote.

There are some policy measures, such as a consumption tax cut on groceries, that the market doesn’t like.

The U.S. wants to prevent a surge in Japanese bond yields from pushing up U.S. Treasury yields, Suehiro noted, while U.S. President Donald Trump may want a weaker dollar, as the U.S. deals with high debt.

“If high interest rates are here to stay due to the debt issue, there would be little fiscal room left to support the economy,” Suehiro wrote.

Under this scenario, a weaker dollar would be an option to stimulate private sector growth, he added.

Last week, the 10-year Japanese government bond yield climbed to a 30-year high of 3.115%. It was trading at about 3.08% on Tuesday. The yen has been supported by formal interventions and significant jawboning but is still trading near four-decade lows against the dollar as concerns about fiscal policy weigh on the currency.

It rallied to break ¥153 to the dollar on Sept. 8, partly due to growing expectations that the Bank of Japan would turn more hawkish to stop the currency from weakening after pressure from the U.S.

But as BOJ Gov. Kazuo Ueda did not clearly signal a hawkish shift at a news conference held after the rate increase on Sept. 18, the currency faced renewed downward pressure, raising the prospect of a slide back toward ¥160.

Last Friday, Katayama spoke with Bessent. They reaffirmed that “the undervaluation of the yen is a matter of concern” and that they intend to strengthen cooperation.