Japanese Finance Minister downplays pressure to raise interest rates: No discussion of monetary policy with Bessant.

Japan's finance minister stated that Japan and the United States have reached a consensus on maintaining orderly fluctuations in the yen, while downplaying reports that U.S. Treasury Secretary Bessenter has been pushing the Bank of Japan to raise interest rates.

According to Bloomberg, Japanese Finance Minister Satsuki Katayama said on Monday during the G20 finance ministers' meeting in Asheville, North Carolina: "Both Bessant and I agree that orderly fluctuations in the yen are crucial to maintaining stability in global financial markets, including the U.S. market, and that continued coordinated efforts between Japan and the United States will help achieve this common goal."

However, Katayama also stated that she did not discuss Japanese monetary policy with Bessenter as reported by the media.

As mentioned in a previous article by Wall Street Insights , according to the latest report from Japan's NHK, U.S. Treasury Secretary Bessenter met with Japanese Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda during the G20 Finance Ministers and Central Bank Governors meeting in North Carolina, and clearly stated that Japan should raise interest rates next.

Bessenter's frequent signals of interest rate hikes in Japan have not eased the pressure on the yen to depreciate.

NHK, citing Erin Browne, Under Secretary of the Treasury for International Affairs, reported that Bessant emphasized during the meeting that Japan needs to clearly signal to the market that it is clearing obstacles to achieving fiscal sustainability and proceeding with interest rate hikes. Related reports indicate that Bessant hopes Japan will clearly demonstrate its fiscal sustainability and its path to raising interest rates.

In fact, Bessant has recently signaled his desire for Japan to tighten its monetary policy on several occasions. In an interview with CNBC on Monday, Bessant said he believes the Japanese government and the Bank of Japan will take measures that will lead to a stronger yen, implying that he expects the Bank of Japan to raise interest rates and that the Japanese government will accept this move.

Following hawkish comments from Federal Reserve Chairman Warsh last week, the yen fell to a near one-month low and approached the 160 yen to the dollar level again, as market expectations for a rate hike at the Bank of Japan's policy meeting on September 17-18 continued to rise. Despite previous joint intervention in the foreign exchange market by Japan and the US, the yen has fallen back to around 160, indicating that it still faces significant depreciation pressure.

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