Bessent Backs Ueda, Sees 'Virtuous Cycle' Ahead for Japan

Treasury Secretary Scott Bessent expressed confidence in Bank of Japan Governor Kazuo Ueda's ability to make decisions in the best interest of Japan's economy. This comes ahead of the BOJ's September policy meeting, which is expected to be closely watched for any potential changes in monetary policy.

Bessent attributed some of Japan's recent inflation uptick to the weak yen and rising energy prices. However, he believes that as energy prices decrease and excessive yen weakness is addressed, Japan can enter a 'virtuous cycle' where inflation slows down, benefiting both the country and its currency.

The US Treasury Secretary had previously called for higher Japanese interest rates and has scheduled a meeting with Ueda at the upcoming G20 finance leaders' meeting in late August. This meeting will take place just before the BOJ's policy decision, which is set to occur on September 17-18.