US Treasury Urges Japan Sound Monetary Policy Amid Weak Yen

U.S. Treasury Secretary Scott Bessent emphasized the need for Japan to adopt sound monetary policy formulation and communication to anchor inflation expectations and avoid excessive exchange rate volatility during his meeting with Japanese counterpart Satsuki Katayama. These remarks, coming ahead of the Bank of Japan's policy meeting, highlight concerns over the slow pace of interest rate hikes following the end of Abenomics' decade-long stimulus. Despite two recent rate increases, the BOJ keeps borrowing costs low, which some critics blame for the yen's weakness and rising import costs contributing to broader inflation. Japan's economic conditions have changed significantly since Abenomics began, prompting calls for updated monetary strategies. The discussions also touched upon Japan's fiscal plans and their potential impacts, with the U.S. indicating ongoing interest in Japan's economic policies. Japanese officials have downplayed direct discussions on monetary policy during the meeting, reflecting internal debates over the BOJ's approach under Prime Minister Sanae Takaichi.