ASHEVILLE, North Carolina - Bank of Japan chief Kazuo Ueda said Tuesday that underlying inflation in Japan is nearing the central bank's 2 percent price stability target, adding that its Policy Board will debate whether to raise interest rates at its next meeting in mid-September.
At a press conference after a meeting of the Group of 20 finance chiefs in North Carolina, Ueda said the BOJ will evaluate upside risks to inflation in guiding monetary policy.
"We will discuss it at every meeting, including the next one" on Sept. 17 and 18, Ueda said, referring to the possibility of another interest rate hike.
Many market participants and BOJ watchers expect the Japanese central bank to raise its policy rate from the current 1.00 percent.
At its previous meeting in July, the BOJ held off from lifting the rate further, but Ueda cited currency movements, the Middle East conflict and demand for artificial intelligence as key factors affecting inflation and future policy decisions.
Ueda said he had "fruitful" discussions on a range of topics with U.S. Treasury Secretary Scott Bessent on Sunday in Asheville. But he declined to offer details.
Bessent has repeatedly suggested that the Japanese central bank raise interest rates to tackle the yen's stubborn weakness.
The U.S. Treasury Department said Tuesday that Bessent called for good monetary policy to avoid excess exchange rate volatility during his weekend meeting with Ueda.
Bessent also voiced "strong support for Japan's decisive market and monetary steps to address the substantial undervaluation of the yen and noted the role of yen weakness in contributing to domestic inflationary pressures in Japan," the department said in a statement.
Their meeting took place a month after Japan and the United States conducted a rare joint currency market intervention to shore up the yen.
On Tuesday, Bessent, who co-chaired the G20 meeting, said at a press conference that Japan should shift away from its accommodative monetary policy of maintaining low interest rates, as he thinks the country has succeeded in reflating the economy.
"Now they have to think about the consequences of its success," he said.
The yen's persistent weakness has added to inflationary pressures in resource-scarce Japan, along with higher energy prices amid the Iran war.
The yield on benchmark Japanese government bonds topped 3.000 percent during Tokyo trading hours on Tuesday, the highest level since 1996.
