US Treasury Secretary Bessent met with BOJ Governor Ueda, calling for sound monetary policy aimed at correcting yen weakness and stabilizing inflation, and pressured the BOJ to raise interest rates. He expressed “strong support” for measures to address yen weakness, prompting market expectations of a September rate hike.
The US Treasury said Secretary Bessent had met with BOJ Governor Ueda and emphasized the importance of formulating and communicating sound monetary policy to stabilize inflation expectations and avoid excessive exchange-rate volatility. He also expressed strong support for Japan’s market and monetary measures to address the yen’s undervaluation.
Bessent said Japan’s measures to correct the yen’s significant undervaluation were addressing the yen’s contribution to domestic inflationary pressures, signaling his support for the BOJ to raise interest rates. Market attention is focused on the possibility of a rate hike at the BOJ’s September policy meeting.
The two men met in Asheville on 30 August on the sidelines of the G20 meeting. The United States and Japan jointly intervened to buy yen in late July in an effort to curb declines in the yen and Japanese government bonds, but some view the intervention as having failed to provide sustained support for the currency.
Bessent said he did not regard the yen’s recent moves as disorderly and stated that he expected the BOJ to “do the right thing” on interest rates. Markets have almost fully priced in the possibility of a September rate hike.