Bessent Pushes BOJ for Rate Hike to Combat Yen Weakness

US Treasury Secretary Scott Bessent met with Bank of Japan Governor Kazuo Ueda on Sunday at the G20 finance ministers' and central bank governors' meeting in Asheville, North Carolina.

Bessent urged the BOJ to take 'decisive' monetary steps to combat yen weakness and anchor inflation expectations. He also emphasized the importance of sound formulation and communication of monetary policy to avoid excess exchange rate volatility.

The BOJ is widely expected to lift rates in September as inflation pressures grow, with a recent spike in wholesale inflation adding to price pressures and triggering warnings of an inflation overshoot from the BOJ.

Bessent's comments effectively lock the bank into doing so and put pressure on it to step up hikes going forward, particularly after the U.S. joined Japan in a rare joint yen-buying intervention on July 31 to prevent a selloff in the yen and Japanese government bonds from spilling over into global markets.