Bessent Backs Ueda, Sees Japan Economy in Virtuous Cycle

U.S. Treasury Secretary Scott Bessent expressed confidence in Bank of Japan Governor Kazuo Ueda's ability to make decisions that benefit Japan's economy. In an interview with NHK, Bessent stated that he believes Ueda will 'do what is best' for the country. This optimism comes after a series of comments from Bessent calling for higher Japanese interest rates.

Bessent also attributed some of Japan's inflation to the weak yen and rising energy prices. He suggested that as these issues are addressed, Japan's inflation will slow down, leading to a 'virtuous cycle' between the country and its currency.

This positive outlook increases the likelihood of an interest rate hike by the BOJ at its next policy meeting on September 17 and 18. Bessent had previously announced that he would meet with Ueda at a G20 finance leaders' meeting later this month, which will take place before the BOJ's upcoming decision.