【By Observer Net, Chen Sijia】On October 27, local time, U.S. Treasury Secretary Bessen and Japanese Minister of Finance Yamamoto met in Tokyo to discuss economic policies and other issues. According to Reuters, Bessen praised Japanese Prime Minister Takahashi's expansionary fiscal stance during the meeting but emphasized the importance of a "sound monetary policy." Analysts believe this is an urging for the Japanese government to raise interest rates as soon as possible.

The U.S. Treasury stated in a statement: "In the discussion, Secretary Bessen emphasized the importance of formulating a sound monetary policy and communication in anchoring inflation expectations and preventing excessive exchange rate fluctuations. He pointed out that 12 years have passed since the implementation of 'Abenomics,' and the current economic environment has undergone significant changes."

The statement said that Bessen also praised the Japanese government's efforts in deregulation, "He believes that Minister Yamamoto can continue to promote productivity improvements in the Japanese economy."

Analysts generally believe that Bessen's remarks are pressuring Japan, implying that Japan should raise interest rates as soon as possible. Bessen has repeatedly commented on the Bank of Japan's policies, calling for the BOJ to adopt "appropriate monetary policies." In August, Bessen criticized Japan for being "too slow" in addressing inflation, stating that Japan needs to control prices through interest rate hikes.

On October 27, Japanese Minister of Finance Yamamoto met with U.S. Treasury Secretary Bessen. Visual China

Bloomberg pointed out that from the U.S. perspective, the prolonged weakness of the yen may give Japanese exporters an "unfair competitive advantage" compared to their American counterparts. Some analysts say that the U.S. government is implementing a weak dollar policy to boost U.S. exports. Therefore, the U.S. has been pressuring Japan to force the yen to appreciate against the dollar.

Regarding the U.S. Treasury's statement, Yamamoto said on the 28th that the meeting did not directly discuss how the Bank of Japan would guide its monetary policy. Yamamoto said she believed Bessen had "no intention of urging the Bank of Japan to raise interest rates," "I believe Mr. Bessen's statements were based on the premise that central banks around the world maintain independence when formulating monetary policies."

Japanese new Prime Minister Takahashi is an advocate of "Abenomics," supporting stimulus policies and a loose monetary policy. Reuters reported that Takahashi asked the Bank of Japan to cooperate with the government's efforts to boost demand, which is seen as opposing the central bank's interest rate hike plans.

The depreciation of the yen has increased Japan's import costs, exacerbating Japan's inflation. Critics blame the weak yen for the slow pace of the Bank of Japan's interest rate hikes. With rising food and raw material costs, Japan's core inflation has remained above the Bank of Japan's 2% target for more than three years.

Minister of Economic and Fiscal Policy Shiroi admitted last week that the weak yen would increase import costs and domestic prices, which actually weakens household and some company purchasing power. However, he insisted that the weak yen also benefits the Japanese economy, increasing profits for Japanese exporters and domestic investment.

Nikkei Asia pointed out that the Bank of Japan's last interest rate hike was in January this year. Since President Trump announced in April the imposition of so-called "reciprocal tariffs," the Bank of Japan has delayed the next interest rate hike. Bank of Japan Governor Haruhiko Kuroda said it is unclear how much impact the slowdown in U.S. growth and tariff policies might have on the Japanese economy, so caution is needed.

The Bank of Japan will hold a two-day policy meeting on October 29 and 30. Most analysts believe that due to the opposition of the Takahashi government to raising interest rates, the Bank of Japan may continue to maintain the current interest rate. On the 6th, Honda Masaru, a senior economic advisor to Takahashi, stated that raising interest rates in October "may be difficult," suggesting that December would be a better time for the rate hike, and a 25-basis-point increase would be feasible then.

Long Xiangtao, a foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities, analyzed: "If Japan wants to reverse the weakening of the yen, it must do so through currency intervention or monetary policy. The market consensus is that the Bank of Japan's next interest rate hike will occur in December this year or January next year, and after a short pause, lending costs will be raised to 1%. However, the Bank of Japan finds it difficult to raise interest rates to the levels of 3% to 4% like Europe or the United States."

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