Bessent Calls for Japan to Hike Rates and Ditch Abenomics

U.S. Treasury Secretary Scott Bessent has called on Japan to take decisive action on monetary policy, including raising interest rates and ending big economic stimulus programs.

This comes a month after a rare joint U.S.-Japan intervention to prop up the yen, which was seen as a message from Bessent for Japan to get its act together on inflation.

BOJ Governor Kazuo Ueda is expected to lift rates in September due to growing inflation pressures, but some analysts believe he needs to step up hikes going forward to combat a weak yen and prevent a selloff in the Japanese currency.

The weak yen has pushed up import prices and broader inflation, causing headaches for Japanese policymakers by increasing households' cost of living, and Bessent's comments put pressure on Ueda to take action.

Bessent's call for an end to Abenomics, a mix of massive monetary stimulus, big spending, and a growth strategy deployed in 2013 to end prolonged deflation, is seen as a swipe at Prime Minister Sanae Takaichi's expansionary fiscal approach.