Japan’s Finance Minister, Katsunobu Kato, has hinted that the Bank of Japan’s interest rate policy will remain a key factor in trade negotiations with the US. In his first face-to-face talks with US Treasury Secretary Scott Bessent on Thursday, Kato refused to comment on specific requests made by the US, but acknowledged that exchange rates would be discussed as part of broader bilateral trade talks.
Analysts see this as an opportunity for the US to pressure Japan into strengthening the yen’s value against the dollar. However, the meeting also suggests that the BOJ may remain committed to its current rate-hike path, despite Trump’s criticism and market expectations.
Kato explained that he discussed Japan’s wage hikes and price developments with Bessent, which may indicate a discussion about monetary policy. The BOJ has signaled its readiness to keep raising rates due to steady rises in wages and inflation. However, the central bank’s rate-hike path is complicated by Trump’s tariffs, which could impact Japan’s fragile economic recovery.
Despite this, BOJ Governor Kazuo Ueda reiterated his commitment to raising rates, citing wage hikes as a positive factor for the economy and the BOJ’s policy. The meeting with Bessent suggests that exchange rates will continue to be a point of contention in trade negotiations between Japan and the US.
Source: https://www.reuters.com/business/finance/yen-bojs-rate-policy-may-remain-focus-japan-us-trade-talks-2025-04-25