The U.S. Treasury disclosed details of a meeting between Treasury Secretary Bessent and Bank of Japan Governor Ueda. A summary of the meeting, held at the G20 meeting at the end of August, was published on 1 September, highlighting the importance of measures to address yen depreciation and of communicating monetary policy.
The U.S. Treasury disclosed that Treasury Secretary Bessent and Bank of Japan Governor Ueda met on 30 August at the G20 Finance Ministers and Central Bank Governors Meeting held in Asheville, North Carolina. A summary of the meeting was published on 1 September, stating that the Secretary emphasized the importance of formulating and communicating sound monetary policy. The Secretary expressed strong support for Japan’s market and financial measures to address the yen’s substantial undervaluation, and also mentioned that yen depreciation was contributing to domestic inflationary pressures.
The disclosure has been interpreted as indicating that Treasury Secretary Bessent intends to encourage the Bank of Japan to raise interest rates to curb dollar strength and yen weakness, and as an attempt to pressure the Bank to implement a rate hike. The Secretary has expressed a similar position previously, and that pressure may have intensified following the coordinated U.S.-Japan intervention at the end of July. Before the meeting, he had also expressed the view that Japan was reaching the end of Abenomics.
Regarding the possibility of a rate hike at the September monetary policy meeting, Governor Ueda did not dismiss comments by overseas officials. Following these remarks, markets have assigned a high probability to a Bank of Japan rate hike while indicating that policy should be managed as part of risk management in light of the effects of exchange rates and higher crude oil prices.