U.S. Treasury’s Bessent Seeks Sound Monetary Policy in Japan

Washington, Oct. 28 (Jiji Press)–U.S. Treasury Secretary Scott Bessent has stressed the importance of prudent monetary policy in Japan to stabilize inflation expectations and exchange rates during a meeting with Japanese Finance Minister Satsuki Katayama, the U.S. Treasury Department said Tuesday. In the meeting in Tokyo on Monday, Bessent “highlighted the important role of sound monetary policy formulation and communication in anchoring inflation expectations and preventing excess exchange rate volatility,” the department said in a statement. “Conditions are substantially different 12 years after the introduction of Abenomics,” Bessent also said, referring to the late former Japanese Prime Minister Shinzo Abe’s economic policy of aggressively pursuing monetary easing and fiscal stimulus amid low interest rates. With the global economic situation shifting toward rising interest rates, the remarks appear to be aimed at restraining the Takaichi administration, launched last week and widely expected to continue Abenomics. At a two-day monetary policy meeting from Wednesday, the Bank of Japan is widely expected to maintain its policy interest rate unchanged. Bessent’s remarks prompted yen buying against the dollar in Tokyo on Tuesday, as some market participants interpreted his comments as an attempt to prevent the Japanese currency from weakening amid fading expectations for an early interest rate hike and concerns over fiscal expansion in Japan. After hearing Katayama’s explanation about the Takaichi administration’s fiscal policy, the secretary “expressed his eagerness to learn more as the full package is worked out so as to better understand the potential impact,” according to the statement. He also hailed Katayama’s “outstanding work on deregulation in her previous cabinet position and shared his firm belief that she can continue to drive productivity gains in the Japanese economy.” Bessent shared with Katayama “his strong confidence in the U.S.-Japan alliance and to the opportunities for positive engagement between the secretary and minister in the months ahead,” the statement also said. “There was no direct talk about monetary adjustments,” Katayama told a news conference Tuesday. “Every country has an independent central bank,” Katayama stressed. She added that she did not interpret his remarks as encouraging an interest rate hike. END [Copyright The Jiji Press, Ltd.]