Story perspectives

Bank of Japan Lifts Rate to 1.25% 31-Year High

By Drooid · Sep 19, 2026, 1:59 AM UTC · How we work

Summary

Story summary

Summary

Bessent Urges Yen Action

U.S. Treasury Secretary Scott Bessent met Governor Ueda at the G20 on Aug 30, urging decisive yen action.
Bessent warned Japan that additional fiscal stimulus would undermine the Bank of Japan (BOJ)’s inflation fight.
Prime Minister Sanae Takaichi reappointed Minoru Kiuchi as economy minister and gave him access to BOJ meetings.
Takaichi said the LDP may raise defense spending to 3.5% of GDP, sparking debt-issuance concerns.

History

Historical Context

In 1998, the Bank of Japan launched a zero-interest-rate policy (ZIRP) after the Asian financial crisis, fixing rates at 0%. Governor Masayoshi Amamiya, backed by the Ministry of Finance, kept the 10-year JGB yield around 0.5% and the yen near ¥130 per dollar. Now, Governor Kazuo Ueda’s 1.25% rate rise, urged by U.S. Treasury Secretary Scott Bessent at the G20, aims to curb 2% inflation and stabilize the yen at roughly ¥157. The 1998 ZIRP precedent warns that prolonged high rates could pressure Japan’s 260%-GDP debt, prompting debates over defense spending and further fiscal tightening.

1 of 3

Story summary

1 / 3