Analysts say a fundamental split between US Treasury Secretary Bessent and
Japanese Prime Minister Takaichi on Bank of Japan policy could weaken recent
US-Japan efforts to push the yen higher. Over the past year Bessent has
signaled tighter monetary policy is crucial to addressing yen weakness;
Takaichi has warned rapid, large rate increases could derail Japan's recovery.
Since Takaichi took office in October the BOJ has hiked twice but the policy
rate remains low at 1%. Last month the US carried out its first yen intervention
since 1998 while the BOJ stood pat — a mixed policy signal that contrasts with
historical experience that reshaping market expectations typically requires
sustained, forceful action. Peter Vassallo, portfolio manager at BNP Paribas
Asset Management US, called the episode a "golden opportunity" missed.
