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US Treasury Secretary Urges Bank of Japan to Rein in Yen Volatility, Manage Inflation
U.S. Treasury Secretary Scott Bessent urged Bank of Japan Governor Kazuo Ueda to use sound monetary policy to manage inflation expectations and curb excessive volatility in the yen, the U.S. Treasury Department said in a statement on Tuesday.
Details of the G20 Discussion
In a meeting with Governor Ueda on Sunday, Secretary Bessent expressed strong support for Japan's efforts to address the yen's undervaluation. The Treasury statement noted that Bessent highlighted how the weak currency has contributed to domestic inflationary pressures by increasing the cost of imports.
The two officials met during the G20 finance ministers’ and central bank governors’ meeting in Asheville, North Carolina. Bessent emphasized that the proper formulation and communication of monetary policy are crucial to anchor inflation expectations and avoid destabilizing exchange rate movements, according to the Treasury.
AdMarket Implications
The comments from the U.S. Treasury add to the growing pressure on the Bank of Japan to tighten its monetary policy. A persistently weak yen has raised the cost of living for Japanese households by making imported goods more expensive.
Market participants see Bessent's remarks as strengthening expectations for the BOJ to raise borrowing costs at its upcoming policy meeting on September 17-18. Such a move would mark a significant shift away from the central bank's long-standing ultra-easy monetary stance.
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