Ahead of the G20 meeting between US and Japanese finance ministers, Japan faces increasing pressure to raise interest rates

(1) U.S. Treasury Secretary Janet Yellen is expected to meet with Bank of Japan Governor Kazuo Ueda during the G20 finance ministers meeting on Monday. The Japanese yen has currently fallen below the 160 threshold against the U.S. dollar, and the yield on the 10-year Japanese government bond is approaching 3%, prompting the market to closely watch the U.S. stance on Japan's policies. (2) Nomura Research Institute Chief Economist Takao Kinouchi stated that these market movements could prompt Yellen to urge Japan during the meeting to adopt "prudent fiscal policy" and proceed with interest rate hikes to mitigate the risks posed by a weakening yen and declining bond prices. (3) As an exchange for last month's joint currency intervention, the Trump administration may demand that Tokyo avoid implementing any policies that could hinder the Bank of Japan's rate hikes more strongly than before. At the same time, Tokyo may reiterate its close cooperation with Washington to ensure exchange rate stability, thereby conveying the possibility of another joint intervention.