U.S. Treasury Secretary Scott Bessent told Bank of Japan Governor Kazuo Ueda to run sound monetary policy that anchors inflation expectations and avoids excessive yen volatility. The Treasury Department said the two met at the G20 meeting in Asheville, North Carolina, and that the remarks bolster the case for a BOJ rate hike at its September 17-18 meeting.
Bessent urged Ueda to conduct sound monetary policy to anchor inflation expectations and avoid excess exchange rate volatility, the Treasury Department said in a statement. The two officials met Sunday at the G20 finance ministers' and central bank governors' meeting in Asheville, North Carolina.
Bessent backs Japan's yen-support steps
Bessent also expressed strong support for Japan's steps to address the yen's undervaluation, noting that yen weakness is contributing to domestic inflation pressure in Japan. A weak yen has pushed up import prices and the broader cost of living for Japanese households.
The U.S. and Japan carried out a rare joint yen-buying intervention on July 31 to signal their resolve against a currency selloff. That move, however, has failed to put a sustained floor under the yen, keeping markets focused on whether the two countries will step in again.
Markets price in a September hike
Bessent told Reuters recent yen moves were not disorderly and said he expects Ueda to "do the right thing" to combat the currency's decline. The BOJ was already widely expected to lift rates in September, but Bessent's comments put added pressure on the bank to follow through and to keep hiking afterward.
A recent run of hawkish BOJ communication has pushed markets to nearly fully price in a September rate hike, which would follow the rate hike that took the BOJ's policy rate to a 31-year high of 1% in June. Ueda and Japanese Finance Minister Satsuki Katayama were in Asheville for the two-day G20 finance leaders' meeting, which ended Tuesday.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
