Treasury Secretary Bessent Urges Japan to Empower Central Bank in Inflation Fight

Treasury Secretary Bessent has called on Japan to grant its central bank greater policy flexibility to tackle rising inflation. The remarks, made via an X post ahead of his departure to South Korea for talks with former US President Donald Trump, emphasized the importance of government support for central bank autonomy in managing inflation expectations and stabilizing exchange rates.

The comments arrive as Japan's economy faces mounting challenges: inflation exceeding targets, a weakening yen, and market uncertainty over the Bank of Japan's next policy moves. While the BOJ is expected to maintain rates at 0.5%, Tokyo traders expressed concerns that Bessent's intervention could pressure the bank to normalize monetary policy after years of deflationary measures.

Meanwhile, the Federal Reserve is anticipated to implement another 25 basis point rate cut this week, with markets pricing in additional easing before 2026. Currency analysts noted immediate yen volatility following Bessent's statement, as the Japanese currency extended its decline against the dollar.