Japan’s Kato Affirms BoJ Independence in Response to US Treasury Comments

Japan’s Kato Affirms BoJ Independence in Response to US Treasury Comments

Japan’s Finance Minister Katsunobu Kato reaffirmed on Thursday that the country's monetary policy decisions remain solely under the authority of the Bank of Japan (BoJ). The statement comes in response to the US Treasury Department’s latest report, which recommended that Japan accelerate monetary tightening to help stabilize the yen and address ongoing trade imbalances.

BoJ Policy Not Influenced by External Pressure

Speaking to reporters, Kato made it clear that the government does not intervene in central bank decisions. He emphasized that the BoJ operates independently, and any policy moves—tightening or otherwise—are made at its discretion, not under foreign influence.

“Monetary policy is decided independently by the Bank of Japan,” Kato said, reaffirming Tokyo’s stance on central bank autonomy.

US Treasury Urges Yen Support

In its semi-annual report, the US Treasury argued that continued BoJ tightening would support yen normalization and foster a more balanced trade relationship between Japan and the United States. The report also highlighted persistent yen weakness as a contributor to Japan’s trade surplus and raised concerns over long-term currency misalignments.

While the Treasury stopped short of labeling Japan a currency manipulator, the call for more aggressive action underlines Washington’s ongoing concerns about exchange rate dynamics.

Forex Markets Watch BoJ Closely

The USD/JPY pair has been highly sensitive to commentary from both Japanese and US officials. Traders are closely monitoring upcoming BoJ meetings for potential signs of a shift toward tighter monetary policy, especially in light of global inflation trends and interest rate divergence with the US Federal Reserve.

While the BoJ has started adjusting its ultra-loose stance in 2024, the pace of change has remained cautious—reflecting Japan’s fragile economic recovery and low inflation expectations.

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