At a press conference following the G20, the U.S. Treasury Secretary was said to have told Japan that it should halt its reflationary policy, making the BOJ's rate-hike stance and the administration's fiscal policy the market's focus.
An interpretation that Treasury Secretary Bessent said Japan should halt its reflationary policy was reported at a press conference following the September G20 meeting of finance ministers and central bank governors, and the matter has spread through the market.
At Governor Ueda's press conference, the BOJ expressed concern that inflation could rise above its 2% target and said the issue would be discussed at its next meeting. A deputy governor's speech in August had also indicated that the pace of rate hikes could accelerate.
The view is gaining ground in the market that Secretary Bessent's comments were directed not at the BOJ as pressure on it, but at the administration's reflationary policy orientation. Differences have been noted in Minister Katayama's response and in the treatment of official Japanese and U.S. information.
Against this backdrop, it remains unclear whether the simultaneous rise in long-term interest rates and weakening of the yen will stop. The administration's definition of reflationary policy and the way it communicates that policy will be key market focuses going forward.