Bessent says he is sure BOJ chief Ueda will 'do what is best', NHK reports

U.S. Treasury Secretary Scott Bessent expressed optimism that Bank of Japan Governor Kazuo Ueda will implement policies to slow Japan's inflation, potentially leading to a rate hike.

U.S. Treasury Secretary Scott Bessent said ​he was sure Bank of ‌Japan Governor ​Kazuo Ueda will "do what is best" for the country's economy, public broadcaster NHK reported on Wednesday. "I do believe that part of the ‌inflation uptick in Japan was a result of the weak yen and also the energy prices," Bessent told NHK in an interview.

As energy prices come down and excessive yen weakness is fixed, Japan's inflation will slow, ‌allowing Japan and the yen to "go into a virtuous cycle," he said. The remarks, which follow a ‌series of comments from Bessent in the past calling for higher Japanese rates, heighten the chance of an interest rate hike by the BOJ at its next policy meeting on September 17 and 18.

Bessent had said he would meet Ueda ⁠at a ​U.S.-hosted G20 finance leaders' meeting ⁠at the end of August, which would precede the BOJ's September policy meeting. Japan and the United States launched a rare ⁠joint yen-buying intervention last week and vowed to take further action if needed to shore up the currency, underscoring ​their resolve to arrest the yen's slide to 40-year lows.

WEAK YEN HURTING ASIAN CURRENCIES In a ⁠separate interview with Japan's Nikei newspaper published on Wednesday, Bessent said the joint yen intervention was aimed at preventing the currency's weakness ⁠from ​spreading instability across Asian currencies.

"Many Asian currencies follow the Japanese yen currently. Korean won is weak because the yen is weak. Many people believe China has a very undervalued currency and they ⁠are reluctant to strengthen the currency too much just because of yen weakness," Bessent was quoted as saying ⁠by Nikkei. When asked about ⁠growing market expectations of an early rate hike by the BOJ, Bessent told Nikkei: "I have known Governor Kazuo Ueda for 15 years. I have great ‌confidence in him. He ‌is very market-savvy."