US Treasury Secretary Bessent (ベッセント) publicly pressed for a stronger yen, putting the BOJ's rate-hike outlook firmly in focus. With a 25-basis-point rate hike at next week's BOJ meeting priced in, the prospect of further hikes or market disappointment spreading could increase the risk of broader turmoil.
US Treasury Secretary Bessent (ベッセント) has repeatedly signaled his intention to monitor the actions of Japanese policymakers, and is widely seen as exerting strong influence over the BOJ's next move. The market is pricing in a rate hike of 25 basis points at next week's BOJ meeting while also focusing on the possibility of further hikes thereafter.
As expectations grow that the BOJ will accelerate the pace of monetary tightening, concerns have been raised that an excessive yen appreciation and a market reaction could unsettle investors. Seisaku Kameda (亀田 制作), an executive economist, said that current rate-hike expectations may be excessively inflated and will need to be revised.
The ruling coalition and BOJ officials have pursued coordinated intervention to sustain the yen's recovery from near-record lows, and Japan and the United States carried out coordinated intervention at the end of July. The latest intervention is said to have involved an amount considered the largest ever on a monthly basis, while Japan appears intent on correcting yen weakness and carefully assessing future rate-hike decisions.
The yen is said to have risen to beyond ¥154 per dollar, and some observers believe the US Treasury secretary's comments are having a direct effect on sentiment in the foreign-exchange market. There have also been concerns that if the BOJ's policy decisions fall short of investor expectations, spillover risks such as an unwinding of carry trades could emerge, as has happened in the past.