Katayama Denies Rate Hike Talks with US Counterpart

Japanese Finance Minister Satsuki Katayama denied discussing interest rate hikes with US Treasury Secretary Scott Bessent during their meeting on the sidelines of the G20 finance meeting in North Carolina. This comes after Bessent publicly stated that he expected Japan to take steps to boost its currency, which has lost half the gains made since the joint intervention between US and Japanese officials in July.

Katayama stressed that monetary policy is left up to the Bank of Japan (BoJ), adding 'there was no such discussion' about rate hikes with Bessent. The BoJ's decision to raise interest rates would largely be aimed at rising inflation, according to Takahide Kiuchi, a former central banker and executive economist at Nomura Research Institute.

The yen has been struggling since the joint intervention in July, strengthening from 163.99 per dollar to 155.23 but now sitting around 159.80. Bessent told CNBC that he expected Japan to take steps to boost the currency, saying 'I think the market's pricing that in now.'

Investors have increased bets on the BoJ hiking interest rates in September, which has led to a rise in the benchmark 10-year Japanese government bond yield to 3.0 percent, its highest since 1996.