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BOJ Holds 0.75% Rate, Signals Near-Term Hike, Yen Slides

5/12/2026

Summary

BOJ Holds Rate

The Bank of Japan kept its policy rate at 0.75% after a 6-3 vote on April 27-28, with three members urging a hike to 1.0%.
On May 12 the bank’s Summary of Opinions signaled a tightening bias, prompting a yen fall and a member’s comment that a rate rise could occur as early as the next meeting.
Another member warned the bank must accelerate hikes without hesitation if upside price risks rise.

Summary

Bessent Ends Visit

U.S. Treasury Secretary Scott Bessent met Prime Minister Sanae Takaichi and Minister Ryosei Akazawa on Wednesday, ending his three-day visit.
Both officials said U.S.–Japan currency communication stays constant and robust, per a September joint statement.
Katayama said Japan considered oil-futures intervention to curb speculative energy price spikes but took none.
Bessent posted on X his confidence in Bank of Japan Governor Kazuo Ueda, saying Japan’s fundamentals are strong.

History

Historical Context

September 1985 the United States, Japan, West Germany, France and the United Kingdom signed the Plaza Accord to weaken the dollar. The pact drove the yen from 238 per dollar in 1985 to 165 in 1986, leading the Bank of Japan to cut its discount rate to 2.5% by February 1987. This coordination set a precedent for signaling to calm yen and support Japan’s growth.

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BOJ Holds Rate

The Bank of Japan kept its policy rate at 0.75% after a 6-3 vote on April 27-28, with three members urging a hike to 1.0%.
On May 12 the bank’s Summary of Opinions signaled a tightening bias, prompting a yen fall and a member’s comment that a rate rise could occur as early as the next meeting.
Another member warned the bank must accelerate hikes without hesitation if upside price risks rise.

1 / 3