Bessent Backs Ueda on Rate Hikes, Citing Yen Weakness and Energy Prices

US Treasury Secretary Scott Bessent expressed confidence in Bank of Japan Governor Kazuo Ueda's ability to make sound economic decisions, stating he is 'sure' Ueda will do what is best for Japan. This assurance comes as the US and Japan have taken joint action to stabilize the yen, which has been trading at 40-year lows.

In an interview with NHK, Bessent attributed some of Japan's inflation to a weak yen and rising energy prices. He believes that as these factors improve, Japan's economy will enter a 'virtuous cycle', allowing the country to slow its inflation rate.

Bessent has been a vocal advocate for higher interest rates in Japan, and his comments heighten the chances of an interest rate hike by the BOJ at its next policy meeting on September 17-18. The US Treasury Secretary also emphasized the importance of preventing the yen's weakness from spreading instability across Asian currencies.