The Japanese yen continues to depreciate, and U.S. Treasury Secretary Yellen: The government should give the Bank of Japan space to combat inflation.

Japan's first female Prime Minister, Sanae Takaichi, took office and the yen depreciated significantly, prompting U.S. Treasury Secretary Janet Yellen to publicly urge the new Japanese government to give the Bank of Japan (BOJ) room to combat inflation. As the BOJ is about to hold its interest rate decision meeting, it seems to also put pressure on the Bank of Japan to raise interest rates and curb the depreciation of the yen. However, Yellen's comments contrast sharply with her views expressed to the Federal Reserve in the United States.

Since the appointment of Japanese Prime Minister Takagi, the yen has been depreciating.

The first female Prime Minister of Japan, Sanae Takaichi, officially took office in October 2025. The market generally believes she is a proponent of “Abenomics” and tends to maintain a loose monetary policy.

As soon as the news of his appointment was announced, the USD/JPY exchange rate directly broke through the 150-yen barrier, leading to a simultaneous weakening of other Asian currencies such as the South Korean won, New Taiwan dollar, and Philippine peso.

The Bank of Japan's interest rate decision, the market expects the interest rate to remain unchanged.

The Bank of Japan will hold its first meeting since Prime Minister Kishida took office on Thursday (10/30), with widespread expectations that the Bank of Japan will keep interest rates unchanged during the meeting, while only 10% of surveyed Bank of Japan watchers predict that the Bank will raise rates. However, more than a third of respondents last month expected the Central Bank to take action at this week's meeting to raise borrowing costs from 0.5%.

The impact of U.S. President Trump's tariffs on the economies of the United States and Japan remains uncertain, while Japan's inflation rate has remained high. The recent depreciation of the yen may further exacerbate inflationary pressures.

Informed sources told Bloomberg that Japanese Central Bank officials believe there is no need to raise interest rates this week, even as the economy moves towards achieving its price target. However, they indicated that the conditions for a rate hike as early as December are already in place.

Besant calls on the new Japanese government to give the BOJ room to combat inflation.

U.S. Treasury Secretary Becerra posted on X, urging the new Japanese government to give its Central Bank (BOJ) the space to combat inflation, which will be key to stabilizing inflation expectations and avoiding excessive fluctuations in the exchange rate. He also praised Japanese Finance Minister Kato Satsuki, stating that she has a profound understanding of how Abenomics has shifted from purely a monetary easing policy to a plan that must balance the Japanese public's concerns about economic growth and inflation.

As I depart from Japan it is clear that, as evidenced by President Trump’s remarks yesterday, both countries will have a Golden Age under our two outstanding leaders: @POTUS @realDonaldTrump and @JPN_PMO @takaichi_sanae.

I look forward to working with the Japanese Minister of… pic.twitter.com/9WjhovUgqf

— Treasury Secretary Scott Bessent (@SecScottBessent) October 28, 2025

Does Besant intend to correct the trend of the yen depreciation?

After comments from Bessent, the interest rate hike expectations rose on Thursday, with overnight swap market rate hike expectations increasing from around 10% the previous day to about 20%.

The US dollar to Japanese yen exchange rate once dropped from 152.12 to 151.54, but is still above the ten-year average level of 122.45, making Japanese exports relatively more competitive. Additionally, the US Treasury has placed Japan on its enhanced currency monitoring list.

The chief market strategist of Aoki Bank, Akira Moroga, stated: “I sense that Besent intends to correct the trend of the yen's depreciation, which makes it feel more difficult to push the yen further down.”

Two days before making this statement, Besant met with Japanese Finance Minister Katsuyuki Katayama in Tokyo. The meeting records released by the U.S. Treasury Department indicate that Besant mentioned the role of “sound monetary policy formulation and communication to stabilize inflation expectations” and preventing excessive fluctuations in exchange rates during the talks.

However, Besant's remarks this time stand in stark contrast to the opinions he expressed to the Federal Reserve (FED) within the United States.

This article discusses how the Japanese Yen has been depreciating, with U.S. Treasury Secretary Janet Yellen stating that the government should give the Bank of Japan the space to combat inflation. It first appeared in Chain News ABMedia.