US Treasury Secretary Scott Bessent met Bank of Japan Governor Kazuo Ueda at the G20 finance ministers' meeting in Asheville, North Carolina, on August 31, and used the occasion to voice strong backing for Tokyo's efforts to address the undervaluation of the yen. The meeting, which also included Japan's Finance Minister Satsuki Katayama, produced a Treasury readout that pointedly endorsed the BOJ's tightening path and called for "sound formulation and communication of monetary policy" to anchor inflation expectations.
The language amounts to the clearest signal yet that Washington wants the BOJ to keep raising rates. Bessent "expressed strong support for Japan's decisive market and monetary steps to address the substantial undervaluation of the yen and noted the role of yen weakness in contributing to domestic inflationary pressures in Japan," according to the Treasury statement. The comments reinforce bets that the BOJ will deliver another 25-basis-point increase at its September 17-18 policy meeting, lifting the benchmark rate from 1.00 percent — already the highest in 31 years — after a hike in June.
Why it matters
The intervention underscores a shift in US-Japan economic diplomacy. For years, Washington tolerated or quietly encouraged Japanese monetary easing to keep the yen weak and support Tokyo's export-driven economy. Bessent's public praise for Ueda — whom he has called an "underrated, savvy market operator" — marks a departure from that stance and signals that the US now sees a stronger yen as politically and economically desirable.
The numbers back the urgency. Despite a joint US-Japan currency intervention in late July involving $98.7 billion in August, the yen has slipped back toward 160 per dollar. Markets were at 159.75 on Monday, perilously close to the level that triggered the intervention. Meanwhile, the 10-year Japanese government bond yield has climbed to 2.95 percent, a level last seen in 1996, as investors price in further tightening. The gap between US and Japanese yields has narrowed enough to unwind much of the carry trade that had compressed yen borrowing costs for decades.
What the BOJ does next
Traders now price an 80-90 percent probability of a September rate hike, according to market data cited by Bloomberg and Yahoo Finance. Several Reuters sources expect the move in either September or October, but Bessent's comments make a September decision harder to defer. The BOJ's current rate of 1.00 percent, raised from 0.75 percent in June, already represents the highest level since 1995. A further increase would bring Japanese monetary policy closer to neutral after a decade of ultra-loose settings under Abenomics.
Katayama, however, played down Bessent's push, suggesting Japan's finance ministry is wary of appearing to take orders from Washington. In public remarks reported by Bloomberg, the finance chief stressed BOJ independence and indicated that rate decisions remain the central bank's alone. The tension between the two positions — US encouragement and Japanese caution — will define the policy debate in the weeks ahead.
Limits and uncertainties
The G20 endorsement does not remove the obstacles the BOJ faces. Inflation in Japan has been driven partly by energy prices and yen weakness rather than robust domestic demand. A further rate rise risks triggering renewed yen strength that could weigh on exporters and equity markets. The carry trade unwinding has already rattled global bond markets, as seen in the 2024 episode when BOJ adjustments sparked volatility worldwide. Whether the BOJ can tighten without destabilizing financial conditions remains an open question, and Bessent's support does not guarantee smooth execution.
Sources
- [US Treasury readout on Bessent-Ueda meeting](https://lufkindailynews.com/news_reuters/business/bessent-meets-bojs-ueda-calls-for-sound-policy-to-avoid-currency-volatility-treasury-says/article_6061cde6-ba1b-5037-bc9c-08bedb2e2e79.html) (Reuters syndication, August 31, 2026)
- [Bloomberg: Bessent Suggests Backing for BOJ Action in Meeting With Ueda](https://www.bloomberg.com/news/articles/2026-09-01/bessent-suggests-backing-for-boj-action-in-meeting-with-ueda) (September 1, 2026)
- [Bloomberg: Japan's Finance Chief Plays Down Bessent's BOJ Rate Hike Push](https://www.bloomberg.com/news/articles/2026-09-01/japan-s-finance-chief-plays-down-bessent-s-boj-rate-hike-push) (September 1, 2026)
- [Cryptobriefing: Bessent praises Japan's Abenomics legacy](https://cryptobriefing.com/bessent-abenomics-ueda-g20-meeting/) (August 30, 2026)
- [Yahoo Finance: Nudge from Bessent firms case for BOJ rate hike](https://finance.yahoo.com/economy/policy/articles/nudge-bessent-firms-case-boj-094949082.html) (September 1, 2026)
