Bessent calls for good monetary policy in meeting with BOJ's Ueda

U.S. Treasury Secretary Scott Bessent emphasized the importance of sound monetary policy during his meeting with Bank of Japan Governor Kazuo Ueda in Asheville, North Carolina, on Sunday. Bessent urged for good monetary policy to prevent excessive exchange rate volatility, according to the Treasury Department's statement. He also expressed strong support for Japan's decisive market and monetary measures to address the significant undervaluation of the yen, attributing a portion of domestic inflationary pressures to the yen's weakness.

This meeting occurred after Bessent repeatedly advocated for the Bank of Japan to raise interest rates to combat the yen's persistent weakness. Markets anticipate the Bank of Japan will increase its benchmark rate during its mid-September policy meeting, given Bessent's pressure and the ongoing global sell-off of government bonds.

On Tuesday, Japan's benchmark 10-year bond yield reached 3 percent for the first time since September 1996. Bessent told Ueda about the significance of well-formulated and communicated monetary policy to anchor inflation expectations and curb exchange rate volatility. A month after Japan and the United States participated in a rare joint currency market intervention to bolster the yen, Japanese Finance Minister Satsuki Katayama met with Bessent on Monday, as part of a two-day Group of 20 finance meeting.

Both countries reaffirmed the importance of orderly yen movements for global financial market stability and pledged to continue working closely together.