The Japanese and U.S. governments conducted a coordinated yen-buying intervention on 31 July, the first in 28 years. Governor Ueda Kazuo (植田 和男) of the Bank of Japan is said to have delivered the decisive signal by indicating that an early rate hike could come from September onward, and the U.S. side highly valued the remarks.
The Japanese and U.S. governments conducted a coordinated yen-buying intervention on 31 July, the first in 28 years. The move is said to have been driven by U.S. concerns that delays in Japanese rate hikes would spill over into the global economy through yen depreciation and higher prices. Several Japanese government officials testified that the decisive factor behind the intervention was Governor Ueda Kazuo's (植田 和男) strong indication at a press conference that day that the Bank of Japan could raise rates sooner than expected from September onward. Information has emerged that the U.S. side highly valued the remarks.
At the Bank of Japan's 30–31 July Monetary Policy Meeting, there were reportedly many calls for an early rate hike, including views that the Bank needed to "pick up the pace" and "show the market how it would respond to rising prices." Against this backdrop, Governor Ueda Kazuo (植田 和男) referred at the press conference to tightening at a faster pace than the market had anticipated. This gave rise to the view that the Bank of Japan's monetary policy management is taking on the character of an international commitment.
The U.S. Treasury authorities had been concerned that Japan's accommodative policy would cause excessive yen depreciation and destabilize global markets, including the United States, through higher long-term interest rates. Treasury Secretary Bessent (ベッセント) in particular reportedly viewed the possibility that rising Japanese long-term yields could push up U.S. interest rates as a problem, while the circumstances ahead of this autumn's midterm elections are also said to have influenced the decision to intervene.
In the market, expectations of a Bank of Japan rate hike at the September meeting have been rising, with the level of pricing implying a hike reaching just above 60%. Meanwhile, concerns about a sharp tightening remain strong within the government, and some observers have pointed out that the Bank of Japan's policy freedom is taking on the character of an international commitment. The course of future U.S.-Japan coordination is expected to affect global capital flows.