U.S. Removes Call for BOJ to Raise Interest Rates

Washington, Jan. 29 (Jiji Press)–The U.S. Treasury Department removed its call for the Bank of Japan to raise interest rates in a semiannual report released Thursday. In the previous report, released in June last year, the department said, “BOJ policy tightening should continue to proceed in response to domestic economic fundamentals including growth and inflation, supporting a normalization of the yen’s weakness against the dollar and a much-needed structural rebalancing of bilateral trade.” Referring to BOJ policy tightening, a senior Treasury official said that “more than six months ago, we saw that as a pressing issue,” adding, “Our focus has really shifted more to other factors.” The latest report cited “the prospects for more expansionary fiscal policies” under the administration of Japanese Prime Minister Sanae Takaichi as a reason for the yen’s weakening. “Japan is very transparent with respect to foreign exchange operations, publishing the total value of its foreign exchange interventions each month and the specific daily amounts and currencies used on a lagged quarterly basis,” the report said. “Japanese authorities maintain that interventions are not targeting specific exchange rate levels,” it also said, given that the Finance Ministry has cited excess volatility or speculative pressures as a reason for actual or verbal interventions since 2022. The senior official clarified that the report was “not in response…to Japanese specific policies” or to the yen’s current weakness. The report placed China, Japan, South Korea, Taiwan, Singapore, Thailand, Vietnam, Germany, Ireland and Switzerland on the “Monitoring List” of major trading partners having large trade and current account surpluses with the United States. Thailand was newly added to the list. In the report, the department noted that Japan, Switzerland, Malaysia, Thailand, South Korea and Taiwan affirmed in joint statements with the United States that interventions should not aim for devaluation and should be limited to “addressing excessively volatile or disorderly depreciation or appreciation.” The report analyzed economic and foreign exchange policies of the United States’ major trading partners over a year through June 2025. If two of the following conditions are met–large trade surplus, current account surplus, and continuous foreign exchange intervention–the country or region will be designated as a monitoring target. END [Copyright The Jiji Press, Ltd.]