Asked whether he meant a BOJ rate hike, Bessent says 'markets are already pricing it in'

US Treasury Secretary Scott Bessent arrives Monday (local time) in Asheville, North Carolina, for the G20 finance ministers' meeting. [AP]
US Treasury Secretary Scott Bessent arrives Monday (local time) in Asheville, North Carolina, for the G20 finance ministers' meeting. [AP]

US Treasury Secretary Scott Bessent said the Japanese government and the Bank of Japan will take steps to strengthen the yen, as the currency has slipped back toward weakness. Markets interpreted his remarks as signaling a possible BOJ interest rate hike at its September policy meeting.

Speaking to CNBC on Monday (local time), Bessent was asked about the effectiveness of a joint US-Japan foreign exchange market intervention. "I can't affect the natural equilibrium. All we can do is send signals," he said, adding, "As I said before, I have information that the market doesn't have."

He then said he believes "the Japanese government and the BOJ will do something that leads to a stronger yen."

When asked whether that meant a BOJ rate hike, Bessent replied, "Market participants are currently pricing in a rate increase."

The remarks, made as the yen has recently resumed its slide, were widely seen as lending weight to the possibility that the BOJ will raise rates at its September monetary policy meeting.

Reuters reported that the yen strengthened against the dollar following Bessent's comments, saying "market expectations that the BOJ will raise rates at its September policy meeting were further reinforced."

Reuters also cited sources as saying the BOJ plans to raise interest rates at its monetary policy meeting scheduled for Sept. 17-18, and is considering accelerating the pace of rate hikes beyond the roughly two increases per year it has maintained.

Bessent is attending the G20 finance ministers' meeting, which opened Monday in Asheville, North Carolina.

During the meeting, he is expected to meet with Japanese Finance Minister Satsuki Katayama and BOJ Governor Kazuo Ueda. Markets are watching closely for any additional signals the two sides may send on yen instability.

The US and Japanese governments jointly intervened in currency markets on Monday, buying yen together. At the time, the yen had hit a 40-year low of around 164 yen to the dollar.

Despite the intervention, the yen reversed course and weakened again, briefly falling past the psychologically significant 160-yen level to 160.20 yen per dollar in New York foreign exchange trading on Friday.


mokiya@heraldcorp.com