By Leika Kihara and Makiko Yamazaki<\/p>\n
TOKYO (Reuters) -Japan’s government on Friday brushed aside rare and explicit comments from U.S. Treasury Secretary Scott Bessent who said the Bank of Japan was “behind the curve” on policy, which appeared to be aimed at pressuring the country’s central bank into raising interest rates.<\/p>\n
However, some analysts saw Bessent’s comments, coupled with unexpectedly solid domestic growth data, as heightening the chance of a near-term rate hike by the BOJ – a view that pushed up Japanese government bond (JGB) yields and the yen on Friday.<\/p>\n
“It’s a sign from the U.S. that they’re watching BOJ policy carefully,” Yuji Saito, executive advisor to SBI FX Trade, said of Bessent’s comments, adding that markets are pricing in the chance of an BOJ rate hike in the next few months.<\/p>\n
“With Bessent’s comments and today’s GDP, the BOJ may see itself cornered” into raising rates, he added.<\/p>\n
In his most explicit comments on Japan’s monetary policy, Bessent told Bloomberg on Wednesday the BOJ will likely be hiking rates as it had an “inflation problem” and could be “behind the curve” in dealing with upward price risks.<\/p>\n
The comments came as rising food and raw material costs have kept Japan’s core inflation above the central bank’s 2% target for well over three years, causing some BOJ policymakers to worry about second-round price effects.<\/p>\n
Japan’s economic revitalisation minister Ryosei Akazawa, who also oversees trade talks with the U.S., brushed aside the view Bessent was pressuring the BOJ to hike rates.<\/p>\n
“He absolutely was not calling on the BOJ to raise rates,” and was only predicting it could do so, Akazawa told a news conference on Friday.<\/p>\n
Finance minister Katsunobu Kato declined to comment when asked about Bessent’s comments in a news conference on Friday.<\/p>\n
Some analysts, however, saw Bessent’s comments as an escalation of Washington’s pressure on Japan to help address the huge U.S. trade deficit by weakening the dollar, such as by pushing up the yen through tighter monetary policy.<\/p>\n