"Different from the Abenomics era"…Bessent pressures Japan to raise interest rates

Emphasized at U.S.-Japan finance ministers' talks

"Now is the time to respond to inflation"

U.S. Treasury Secretary Scott Bessent pointed to the weak yen and effectively urged Japanese authorities to raise their benchmark interest rate.

According to the Nikkei on the 29th, Bessent emphasized the need for sound monetary policy to Satsuki Katayama, Japan's Minister of Finance, at the U.S.-Japan finance ministers' meeting held in Tokyo on the 27th. Bessent said, "Twelve years have passed since Abenomics was introduced and the situation has changed significantly," and argued that "an interest rate increase by the Bank of Japan, Japan's central bank, is necessary to stabilize prices and prevent excessive exchange rate fluctuations."

Abenomics is former Prime Minister Shinzo Abe's economic policy, centered on fiscal expansion and monetary easing. Bessent, who has been pressuring the Bank of Japan to raise its policy rate, stressed, "Now is the time to respond to inflation, so we should not tolerate a weak yen." In a post on X as he left Japan that day, he said, "The government's willingness to give the Bank of Japan room for policy will be the key to stabilizing inflation expectations and avoiding excessive exchange rate fluctuations." Nikkei explained, "For the Donald Trump administration, which advocates the revival of U.S. manufacturing, it cannot overlook an excessive weakness in the currency of a major trading partner like Japan."

The Bank of Japan raised its policy rate from 0.25% to 0.5% in January this year and then kept the policy rate unchanged at all five Monetary Policy Meetings held through September. Market expectations are that the rate will also be kept unchanged at this month's meeting.

Reporter Han Gyeong-je hankyung@hankyung.com