Bessent Backs Ueda for Economic Boost

US Treasury Secretary Scott Bessent expressed confidence in Bank of Japan Governor Kazuo Ueda's ability to make decisions that benefit the Japanese economy. In an interview with NHK, Bessent stated that he believes part of Japan's inflation uptick is due to the weak yen and energy prices.

Bessent suggested that as energy prices decrease and the excessive weakness in the yen is addressed, Japan's inflation will slow down, allowing the country and its currency to enter a 'virtuous cycle'. This optimistic view heightens the likelihood of an interest rate hike by the BOJ at its next policy meeting on September 17 and 18.

Bessent had previously called for higher Japanese rates and is set to meet Ueda at a US-hosted G20 finance leaders' meeting later in August. The recent joint yen-buying intervention between Japan and the US demonstrates their commitment to stabilizing the currency, which has reached 40-year lows.