US Treasury Urges Bank of Japan to Raise Rates to Address Weak Yen

The US Treasury has explicitly advised the Bank of Japan to increase interest rates, citing the need to stabilize the yen's prolonged weakness. In its latest foreign-exchange report to Congress, the Treasury emphasized that monetary policy should align with Japan's domestic economic indicators—particularly growth and inflation—to guide rate adjustments.

A stronger yen WOULD help rectify trade imbalances between the US and Japan, the report argued, leveling the playing field for American exporters. The Treasury also criticized Japan's public pension funds for investing abroad to manipulate exchange rates, urging them to prioritize risk-adjusted returns instead.

This rare public intervention underscores Washington's growing impatience with Japan's ultra-loose monetary policy, which has kept the yen depressed for years. Japanese officials have yet to issue a substantive response to the remarks.