Bessent Predicts Japanese Authorities Will Act to Strengthen Yen, Signaling BOJ Rate Hike in September

ASHEVILLE, North Carolina, Aug 31 (Reuters) — U.S. Treasury Secretary Scott Bessent expressed confidence that Japan’s government and central bank will take decisive action to support the yen, signaling a strong likelihood of a Bank of Japan (BOJ) interest rate hike in September.

These remarks follow Bessent’s comments on Sunday, when he stated he expects BOJ Governor Kazuo Ueda to implement appropriate monetary policy measures to combat the yen’s ongoing decline.

“I have information that the market does not have, and it is my belief that the Japanese government and the BOJ will take the steps necessary to lead to a stronger yen,” Bessent told CNBC during an interview on the sidelines of the Group of 20 (G20) finance leaders’ gathering in Asheville, North Carolina.

When asked whether this meant raising interest rates, Bessent replied, “I think the market is already pricing that in.”

The yen strengthened against the dollar following Bessent’s comments, reinforcing dominant market expectations that the BOJ will raise rates at its next policy meeting in September.

On Monday, the dollar traded at 159.73 yen, remaining close to the critical 160 threshold, a level widely viewed as heightening the risk of official yen-buying intervention.

Bessent announced he would meet with Governor Ueda on the sidelines of the G20 meetings, which are taking place on Monday and Tuesday.

Sources have told Reuters that the BOJ is poised to raise interest rates at its September 17–18 meeting and is considering accelerating its tightening pace beyond the current rate of approximately two hikes per year.

Bessent’s persistent calls for BOJ rate hikes have been a key factor driving markets to nearly fully price in a September hike, following the central bank’s last rate increase in June.

A rate hike next month, rather than waiting until October, could fuel market bets that the BOJ intends to raise rates on a quarterly basis, some analysts noted.

A weak yen has elevated import prices and broader inflation, creating significant headaches for Japanese policymakers. The currency’s depreciation has been partly blamed on the slow pace of BOJ rate hikes, which has kept Japan’s interest rate divergence with the U.S. wide.

Japan and the U.S. conducted a rare joint yen-buying intervention on July 31, signaling their strong determination to prevent a selloff in the yen and Japanese government bonds from spilling over into global markets.

While that intervention failed to establish a sustained floor under the yen, Bessent told Reuters he does not view recent yen moves as disorderly, suggesting Washington is not currently inclined to join Tokyo in another market intervention to prop up the currency.

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