Japanese media: Bank of Japan Governor’s hint of a September interest rate hike led to a joint US-Japan yen-buying operation.

According to Japan’s Kyodo News, multiple Japanese government officials revealed on the 10th that the Japanese and U.S. governments conducted an unusual joint yen-buying intervention on July 31 (U.S. Eastern Time), marking the first such action in 28 years. The decisive factor was Bank of Japan (BOJ) Governor Kazuo Ueda’s strong hint at a July 31 press conference that he would raise policy rates as early as September and beyond. Ueda explicitly stated he would “accelerate the pace of interest rate hikes” if necessary. The U.S. side gave a positive assessment, with both sides aligned on preventing excessive yen depreciation. The U.S. is concerned that Japan’s delayed rate hikes have caused excessive yen depreciation, which has in turn spurred further price increases and rising long-term interest rates, potentially spilling over to global financial markets. A senior Japanese government official disclosed: “Governor Ueda’s remarks were highly persuasive to the U.S. side. At the same time, this means the BOJ has no choice but to raise interest rates at its next policy meeting (scheduled for September 17-18).”