TOKYO: Japan will push back firmly on any attempts by U. S. President Donald Trump’s administration to meddle with its independence on setting currency and monetary policies, say sources familiar with the deliberations in Tokyo.
It was the first clear sign from Japan that Tokyo won’t allow Trump to dictate domestic economic policy, leaving room for potential tensions between the staunch allies as Trump’s first term gets underway.
Policymakers were shocked by an accusation from Trump this week that Tokyo is using « money supply » for currency devaluation, a sign his criticism could distract the BOJ from its years-long efforts to revitalise the economy.
Any explicit pressure from Trump that binds Japan’s hands on monetary policy would challenge existing international protocols like a Group of 20 agreement, which broadly recognizes that domestic polices are a matter for individual members.
Ahead of Prime Minister Shinzo Abe’s meeting with Trump next week, Japanese policymakers are preparing to argue that their ultra-loose monetary policy is intended solely to beat deflation and was not currency manipulation, the sources said on condition of anonymity.
And if persuasion alone does not work, they will seek to coordinate with Japan’s G7 and G20 counterparts for support that they are abiding by a joint agreement to refrain from using monetary policy for currency devaluation, the sources said.
« Japan and Europe will continue to promote independence of monetary policy, » said a government official with knowledge of the matter, adding that U. S. criticism « won’t tie our hands. «
« There’s no reason for the United States to criticise our currency and monetary policies.
