US Treasury Secretary Repeatedly Presses Japan to Raise Rates, Drawing Charges of Interference

Scott Bessent’s repeated calls for Japan to act against the weak yen are prompting accusations in Japan that Washington is interfering too deeply in domestic economic policy.

The US Treasury said Bessent told Bank of Japan Governor Kazuo Ueda that Japan needed to set monetary policy appropriately and communicate it clearly to the market. He said this would help stabilize inflation expectations and avoid excessive exchange-rate volatility. Bessent also said he “strongly supports Japan taking decisive action to deal with the substantial yen depreciation.”

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I strongly support Japan taking decisive action to deal with the substantial yen depreciation.

The comments came ahead of the Bank of Japan’s Sept. 17-18 policy meeting, where officials will decide the benchmark interest rate. The yen had climbed back into the 160-per-dollar range, renewing arguments that Japan should narrow the interest-rate gap with the United States to address the currency’s weakness structurally.

Washington is concerned that yen depreciation could push Japanese government bond yields higher and, in turn, raise long-term US borrowing costs. Japan is the largest foreign holder of US Treasury securities. On July 2, Japan’s 10-year government bond yield rose into the 3% range during trading for the first time in three decades, while the US 10-year yield reached its highest level in about 22 months. British and German yields also rose that day.

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It was a useful discussion, but we did not discuss what specific measures Japan should take.

Ueda described his meeting with Bessent as useful but said they had not discussed specific measures Japan should take. He declined to provide further details. He had previously identified higher oil prices linked to the Middle East, increased demand related to artificial intelligence, and the weak yen as risks that could accelerate inflation.

Nomura Research Institute said the Trump administration appeared to be increasing its intervention in Japanese economic policy to prevent the weak yen and falling Japanese government bond prices from harming the United States and the global economy. It also expected Washington to apply greater pressure for changes to Prime Minister Sanae Takaichi’s expansionary fiscal policies.

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The Trump administration appears to be strengthening its tendency to intervene in Japanese economic policy to prevent the negative effects of the weak yen and weak Japanese government bonds on the United States and the world.