Bessent publicly pressures the Bank of Japan to raise interest rates and claims to possess asymmetric information

The public pressure campaign by US Treasury Secretary Bessent to drive yen appreciation has heightened market expectations that the Bank of Japan will undertake a monetary tightening move not seen in over a generation—an action that, if not delivered, could trigger turbulence in the markets. In an unusually blunt display of market jawboning, the US Treasury Secretary on Tuesday boasted of holding “asymmetric information” regarding the Bank of Japan’s next steps and called himself the “house.” Speaking at an event at Southern Methodist University in Texas, the former hedge fund trader did not limit his remarks to the central bank, claiming he knew what “Japanese policymakers” were planning more broadly. While Bessent stopped short of specifying what outcome he sought, just last week he publicly urged Japanese officials to “do the right thing” on interest rates. Markets are already anticipating a 25 basis point rate hike next week, and pressure is mounting on Governor Ueda to deliver a forceful enough message at the meeting about future tightening to avoid disappointing the market and erasing recent yen gains. Bessent’s remarks highlight his unusually deep involvement in shaping Japanese economic policy—Japan being the largest foreign holder of US debt. At the end of July, he coordinated with Japan’s Finance Minister for the first joint intervention to support the yen since 1998.