U.S. Treasury Secretary Scott Bessent signaled Japan’s central bank is likely to raise interest rates in September to strengthen the yen, citing market expectations and recent diplomatic discussions with Japanese officials.
U.S. Treasury Secretary Scott Bessent has signaled that Japan’s central bank is poised to raise interest rates in September, aiming to stabilize the yen amid persistent currency pressures. His remarks, made during a Group of 20 finance leaders’ gathering in Asheville, North Carolina, reinforced market expectations that the Bank of Japan (BOJ) will take action to curb the currency’s decline.
Bessent’s Comments and Market Reaction
Bessent told CNBC on Monday that he believes the Japanese government and BOJ will do the things that will lead to a stronger yen,
a statement that immediately boosted the currency against the dollar. The yen gained following his remarks, with the dollar trading at 159.75 yen—a level close to the 160 threshold that could trigger further intervention.
I have information that the market doesn’t have,
Bessent said, adding, I think the market’s pricing that in now.
His comments echoed a similar statement made to Reuters the previous day, where he urged BOJ Governor Kazuo Ueda to do the right thing
on monetary policy. Treasury official.
A senior U.S. However, Reuters could not confirm that the meetings took place.
Potential Rate Hike and Policy Implications
The BOJ is expected to raise rates at its September 17-18 meeting, with some analysts suggesting the central bank may accelerate hikes beyond its current pace of roughly two times a year. A hike next month, rather than in October, could fuel market bets the BOJ will raise rates once every quarter, some analysts said. The Japanese central bank raised rates in June.
Sources have told Reuters the BOJ is set to raise rates as soon as its September 17-18 meeting and is considering hiking more aggressively than the current pace of roughly two times a year after that session. Sources have told Reuters the BOJ is set to raise rates as soon as its September 17-18 meeting and is considering hiking more aggressively than the current pace of roughly two times a year after that session.
U.S.-Japan Coordination and Yen Interventions
Japan and the U.S. carried out a rare joint yen-buying intervention on July 31, signaling their determination to prevent a selloff in the yen and Japanese government bonds from spilling over into global markets.
While that action failed to put a sustained floor under the yen, Bessent told Reuters he did not see recent yen moves as disorderly, suggesting Washington was in no mood to join Tokyo for another foray into the market to prop up the currency.
Bessent told Reuters he did not see recent yen moves as disorderly, suggesting Washington was in no mood to join Tokyo for another foray into the market to prop up the currency. The dollar stood at 159.75 yen on Monday, still close to the 160 mark that is seen as heightening the chance of yen-buying intervention.
Market Dynamics and Inflation Pressures
A weak yen has pushed up import prices and broader inflation, causing headaches for Japanese policymakers. It has been blamed in part on the slow pace of rate hikes by the BOJ, which has kept Japan’s rate divergence with the U.S. wide. Bessent’s repeated calls for BOJ rate hikes have been among the factors that led markets to nearly fully price in the chance of a September hike.
The BOJ’s next steps will be closely watched for their impact on inflation, trade dynamics, and the broader Asia-Pacific economy. Analysts noted that a September hike could shift market expectations toward quarterly rate increases, altering Japan’s monetary trajectory. Bessent’s repeated calls for BOJ rate hikes have been among the factors that led markets to nearly fully price in the chance of a September hike.
