NHK, citing an interview with a U.S. official, reported that Treasury Secretary Scott Bessent told Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda that Japan's next step should be to lift interest rates. The discussion followed an earlier Reuters report on his comments saying he expects the BOJ "to do the right thing" on monetary policy, and it came before the central bank's Sept. 17-18 meeting.
Erin Browne, Treasury's under secretary for international affairs, provided the account of the meeting and said it took place on the margins of the Group of 20 finance ministers and central bank governors' meeting in North Carolina. Browne added that Bessent urged Japan to make clear to markets that it is paving the way to put public finances on a sustainable footing and to move toward higher interest rates. Those comments were viewed as bolstering the view that the BOJ will lift its policy rate in September.
Speculation that the BOJ could tighten more quickly has intensified since the U.S. and Japan jointly intervened in the foreign-exchange market after the BOJ's late-July meeting. On Friday, Japan's Finance Ministry announced that, over the past month, the value of its interventions reached ¥15.4 trillion ($96.4 billion), the highest on record. The U.S. has not revealed how much yen it purchased, though the amount is expected to be much smaller.
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Over the last year, the Treasury secretary has repeatedly signaled a preference for a BOJ rate increase to support the yen instead of relying on repeated market interventions. In a CNBC interview on Monday about the yen's slide since the July 31 joint operation to buy the currency, Bessent said, "I can't affect the natural equilibrium. What we can do is send a signal," and, "I have information that the market doesn't have, and it's my belief that the Japanese government and the BOJ will do the things that will lead to a stronger yen." Asked about the likelihood of a BOJ rate hike, he added, "I think the market's pricing that in now."
