TOKYO — US Treasury Secretary Janet Yellen met with Bank of Japan Governor Haruhiko Kuroda on Tuesday, the Treasury Department said, as both countries grapple with mounting economic challenges exacerbated by Russia’s war in Ukraine.
Yellen will meet later on Tuesday with Japanese Finance Minister Shunichi Suzuki, where the two will likely touch on currencies, a Japanese official said.
The meetings come as the yen is trading at 24-year lows to the dollar, weighing on Japan’s fragile economy by inflating the cost of importing fuel and raw material.
A senior Treasury official said Yellen’s conversations would include her assessment of the US and global economies, as well as US efforts to shore up supply chains and combat inflation.
In that context, the officials would also discuss divergent monetary policy trends in the United States and Japan, and their likely implications, the official said.
Yellen, former chair of the US Federal Reserve, would not speak for the Fed, but would describe the US central bank’s actions to raise interest rates to combat inflation, now running at 40-year highs, the official added.
Last week’s better-than-expected US jobs report eased some worries about an imminent recession but also bolstered the case for the Federal Reserve to continue aggressively hiking rates, threatening more turbulence for asset prices this year.
Rate futures contracts now reflect a base-case view that the Fed’s policy rate will be in the 3.5%-3.75% range by year end, higher than Fed policymakers themselves predicted three weeks ago.
The Bank of Japan, meanwhile is expected to raise its inflation forecast but maintain ultra-low interest rates at this month’s policy meeting, sources say. (Reporting by Andrea Shalal; Additional reporting by Leika Kihara Editing by Shri Navaratnam)