Bessent Expressed Confidence in BOJ Chief Ueda Ahead of Rate Hike Decision

US Treasury Secretary Scott Bessent expressed confidence in Japan's central bank governor Kazuo Ueda to make decisions that benefit the country's economy. In an interview with NHK, Bessent stated he is sure Ueda will 'do what is best' for Japan.

Bessent attributed part of Japan's inflation uptick to a weak yen and energy prices. As energy prices decline and excessive yen weakness is addressed, Japan's inflation is expected to slow down, initiating a virtuous cycle for the country and its currency.

The remarks from Bessent increase the likelihood of an interest rate hike by the Bank of Japan (BOJ) at its upcoming policy meeting on September 17 and 18. The US Treasury Secretary also mentioned he would meet Ueda before the BOJ's meeting, further heightening expectations for a potential rate hike.

Japan and the United States recently conducted a joint yen-buying intervention to stabilize the currency, which has reached 40-year lows. Bessent emphasized that this action aims to prevent the yen's weakness from spreading instability across Asian currencies.