The U.S. Treasury Secretary met with BOJ Governor Ueda Kazuo (植田和男) and called for sound monetary policy to stabilize inflation expectations and avoid excessive exchange rate volatility. He expressed strong support for measures to address yen depreciation, increasing the likelihood that debate over a BOJ rate hike will influence developments going forward.
The U.S. Treasury Department announced a meeting between Treasury Secretary Bessent and BOJ Governor Ueda Kazuo (植田和男), saying that Bessent called for sound monetary policy to stabilize inflation expectations and avoid excessive exchange rate volatility. This suggested that the U.S. was encouraging the BOJ to raise interest rates. The Treasury Secretary reportedly expressed “strong support” for Japan’s market and financial measures to address the yen’s undervaluation, and also referred to the view that yen depreciation was creating domestic inflationary pressure.
Among market participants, views have strengthened that the BOJ is increasingly likely to raise rates at its 17-18 September monetary policy meeting following these remarks. The comments are also seen by some as supporting the normalization of Japan’s monetary policy against the backdrop of the U.S.-Japan alliance. The two men held the meeting in conjunction with the G20 Finance Ministers and Central Bank Governors Meeting in late August.