U.S. Treasury Urges Japan to Tighten Monetary Policy Amid Yen Weakness
The U.S. Treasury Department advises the Bank of Japan to continue monetary tightening to normalize the yen's weakness and balance bilateral trade. The move is seen as necessary due to U.S. tariffs complicating Japan's economic policies. Japan's response and future rate hikes remain uncertain.
The Bank of Japan has been urged by the U.S. Treasury Department to continue its monetary tightening efforts. This guidance aims to spur a 'normalization of the yen's weakness' and address trade imbalances between the U.S. and Japan, as outlined in the department's latest exchange-rate report.
The report indicates that Japan's ultra-low interest rates contribute to a weaker yen against the dollar, complicating monetary normalization efforts. Despite the BOJ's gradual rate increases, U.S. tariffs imposed under former President Trump pose additional challenges. Japanese Finance Minister Katsunobu Kato indicated that monetary policy decisions remain within the BOJ's purview.
Amid these economic dynamics, the U.S. Treasury has refrained from directly accusing any major trading partner, including Japan, of currency manipulation. However, Japan remains under scrutiny for its currency practices. Future interest rate decisions by the BOJ face uncertainty, with possible pressures from the U.S. to adjust the dollar's value against the yen.
(With inputs from agencies.)
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