US Treasury Secretary Scott Bessent said he believes Japan's government and central bank will take action that leads to a stronger yen, signaling a strong chance of a Bank of Japan interest rate hike in September. Bessent made the remarks in an interview with CNBC during a Group of 20 finance leaders' gathering in Asheville, North Carolina, as reported by CNBC and carried by multiple outlets.
Bessent's comments followed his earlier statement to Reuters, in which he said he expects BOJ Governor Kazuo Ueda to "do the right thing" on monetary policy to combat yen declines.
"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," Bessent told CNBC. When asked whether that meant raising interest rates, Bessent said: "I think the market's pricing that in now."
The yen gained against the dollar after Bessent's comments, which reinforced dominant market expectations that the BOJ will raise rates at its next policy meeting in September. The dollar stood at 159.73 yen on Monday, close to the 160 mark that is seen as heightening the chance of yen-buying intervention.
Bessent had said he would meet Ueda on the sidelines of the G20 meetings, which took place on Monday and Tuesday. A senior US Treasury Department official told Japanese public broadcaster NHK that Bessent met Ueda on Sunday and Japanese Finance Minister Satsuki Katayama on Monday. In those meetings, Bessent called for further rate hikes and for Japan to clearly show markets how it would achieve fiscal sustainability, Erin Browne, undersecretary for international affairs at the US Department of the Treasury, was quoted as saying in an interview with NHK. Reuters could not confirm the meetings took place.
Sources have told Reuters that 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. 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 Japanese central bank raised rates in June.
A hike next month, rather than in October, could fuel market bets that the BOJ will raise rates once every quarter, some analysts said. A weak yen has pushed up import prices and broader inflation, and the slow pace of rate hikes by the BOJ has kept Japan's rate divergence with the US wide. Japan and the US carried out a rare joint yen-buying intervention on July 31, but the yen remains weak despite those efforts.
Bessent told Reuters he did not see recent yen moves as disorderly.