Tokyo's record-beating stock rally ends as Bessent jawbones Japan on rates
"They're behind the curve," Bessent told Bloomberg in discussing the Bank of Japan. "So they're going to be hiking, and they need to get their inflation problem under control."
Japan's inflation remains stubbornly high — well above 3% — while the Bank of Japan has kept rates pegged at 0.5% since January.
The central bank increased its inflation forecast at a policy board meeting in July, noting trade-related uncertainty. Most economists polled in a July survey by Reuters expect Japan's rates to be increased by at least 25 basis points by the end of the year.
A two-day, record-beating rally in Tokyo stocks came to an end on Thursday morning after Bessent's comments aired.
Japan's Nikkei 225 stock index opened down on Thursday morning and was off 1.45% at the close.
Mitsubishi Heavy Industries declined 5.677%, while Recruit Holdings was down 4.60%. Toyota Motor, Japan's largest company by market capitalization, fell 2.43%.
The Nikkei 225's retreat on Thursday followed steady gains Tuesday and Wednesday, with records being hit both days. The benchmark index reached an all-time high on Tuesday of 43,451.46 in intraday trading.
The yen strengthened against the dollar following the treasury secretary's comments, going from about ¥147.5 in overnight trade to about ¥146.5 in Tokyo on Thursday afternoon.
Bessent also told Bloomberg that the U.S. Federal Reserve should cut its policy rate in September, echoing recent comments by U.S. President Donald Trump.
'I do think we could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,' he said. 'We should probably be 150, 175 basis points lower.'
On Tuesday, the U.S. reported July inflation at 2.7%, below expectations and in line with the June reading. The figure raised hopes that Trump's tariffs will have a limited effect on prices and allow the Fed to start lowering interest rates soon.
'Jerome 'Too Late' Powell must NOW lower the rate,' Trump wrote in a Truth Social post on Tuesday in discussing Fed Chair Jerome Powell. 'The damage he has done by always being Too Late is incalculable.'
During his interview with Bloomberg, Bessent suggested inflation overseas might be feeding into the United States and putting upward pressure on bond yields, and said he has had discussions with Bank of Japan Gov. Kazuo Ueda, without elaborating.
"There's definitely leakage from — the Japanese have an inflation problem,' he noted.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NHK
4 hours ago
- NHK
JICA to recognize 4 Japanese cities as Africa 'hometowns'
Four Japanese cities are set to be recognized as the "hometowns" of African nations, aiming to foster human resources who can serve as bridges between Japan and Africa. The initiative is being launched in conjunction with a Japan-led conference on Africa's development. The Tokyo International Conference on African Development, or TICAD, will take place in Yokohama City for three days from August 20. JICA, the Japan International Cooperation Agency, plans to designate at least four Japanese municipalities as "hometowns" of African countries as part of its initiative to deepen exchanges. So far, Nagai City in Yamagata Prefecture is expected to be named as the hometown of Tanzania; Kisarazu City in Chiba will be the hometown of Nigeria; Sanjo City in Niigata will serve as hometown for Ghana; and Imabari City in Ehime, for Mozambique. Foreign ministry officials say that by the year 2050 the population of Africa is expected to be about a quarter of the world's population, so it is essential for Japan to incorporate the vitality of the continent. The officials add that they hope direct connections between Japanese and African municipalities will lead to the expansion of exchanges.
Japan Times
10 hours ago
- Japan Times
Japan to accelerate development of logistics network in Africa
Prime Minister Shigeru Ishiba will unveil Japan's plan to accelerate the development of the Nacala Corridor, a logistics network in Africa, at the upcoming ninth edition of the Tokyo International Conference on African Development (TICAD), informed sources said. The planned corridor, which will link the inland African country of Zambia and a port in Mozambique in the southeastern part of the continent via Malawi, is aimed at enhancing supply chains for mineral resources. Zambia is a mineral-rich country, and minerals such as copper and cobalt produced there are mainly exported through ports in Angola, western Africa. Using Nacala port in Mozambique, however, is more convenient for exports to Japan. The Japanese government has been developing the Nacala Corridor since 2012. At the three-day event starting Wednesday in Yokohama, Ishiba, who will chair the conference, will pledge Tokyo's support for the three countries hosting the Nacala Corridor by utilizing investment and loan programs of private firms and international organizations, as well as the government's official development assistance program. Specifically, Japan will support the development of water facilities and highways in order to promote industrial growth and increase the value of the areas. Japan is slated to launch a new initiative to strengthen economic ties with India, the Middle East and Africa. The government will support Japanese companies' advances into these regions by helping expand trade and investment through the new economic initiative and the Nacala Corridor. By leveraging the Nacala Corridor, Japan aims to increase its competitiveness with China, which is trying to increase its presence in Africa by providing countries in the continent with subsidies. Establishing solid supply chains for critical minerals is "directly associated with Japan's economic security," a Japanese government official said. "The development of the Nacala Corridor will contribute to the development of Africa and also benefit Japan." U.N. Secretary-General Antonio Guterres is slated to visit Japan in order to attend the conference, where he will underscore TICAD's importance and the potential growth of Africa, a spokesperson said Friday. After attending the conference, Guterres is slated to visit the Osaka Expo.
Japan Times
13 hours ago
- Japan Times
Taiwan foreign minister's visit puts damper on Japan-China relations
Taiwanese Foreign Minister Lin Chia-Lung's latest trip to Japan has put a damper on Sino-Japanese ties, with Beijing canceling at the last minute a bilateral meeting of agriculture ministers. Chief Cabinet Secretary Yoshimasa Hayashi avoided going into detail during a news conference Friday, stating only: "We understand that (the ministerial meeting) was not held due to scheduling conflicts of both sides." Chinese agriculture minister Han Jun was set to visit Japan to hold a meeting with his Japanese counterpart, Shinjiro Koizumi, on Tuesday, after a trilateral agriculture ministers' meeting involving the two nations plus South Korea held in Incheon near South Korea's capital, Seoul, on Monday. Many within the Japanese government consider Lin's Japan visit in late July to be the reason for the cancellation. The Taiwanese side has said that the foreign chief had made a personal visit to Japan. During the trip, however, he held talks with Keiji Furuya of Japan's ruling Liberal Democratic Party, who heads a suprapartisan group of Japanese lawmakers aiming for stronger Tokyo-Taipei relations, and other Japanese officials. In light of heightened tensions between China and the United States, Beijing has been pushing for improved ties with Japan. In autumn last year, China resumed its visa exemption for short-term stays by Japanese nationals. It announced in June this year the restart of imports of Japanese fishery products. The Chinese government has been especially sensitive about the Japanese government's historical perceptions and Taiwan issues due to it marking the 80th anniversary this year of its victory in the past war against Japan. A senior official at the Japanese Foreign Ministry said, "China had to take a strong response based on moves by Taiwan." Lin's trip may also impact Japan-China high-level talks expected to be held on the sidelines of a series of summits related to the Association of Southeast Asian Nations in Malaysia in October.
