Bessent Puts Pressure on BOJ to Hike Rates Amid Yen Volatility Concerns
US Treasury Secretary Scott Bessent met with Bank of Japan Governor Kazuo Ueda at the G20 finance ministers' and central bank governors' meeting in Asheville, North Carolina, on September 1. Bessent emphasized the importance of sound monetary policy to anchor inflation expectations and avoid excessive yen volatility. The US official expressed 'strong support' for Japan's steps to address the yen's undervaluation and noted that a weak yen is causing domestic inflationary pressures.
The meeting between Bessent and Ueda took place on Sunday, ahead of the BOJ's next policy meeting on September 17-18. A rate hike in September has been widely expected by markets, but Bessent's comments now effectively lock in a decision for the BOJ to raise interest rates.
The weak yen has pushed up import prices and broader inflation in Japan, causing headaches for policymakers as households' cost of living increases. The US and Japan joined forces on July 31 to signal their determination to prevent a selloff in the yen from spilling over into global markets.