Bank of Japan chief navigates pressures from Takaichi and US Treasury on rate policy

Kazuo Ueda has what might be the least enviable job in central banking right now. The Bank of Japan governor just hiked rates to 1.25%, a level Japan hasn’t seen since 1995, and the reward for his trouble is pressure from two directions that want opposite things. On one side, Prime Minister Sanae Takaichi wants him to keep monetary policy loose enough to support economic growth. On the other, US Treasury Secretary Scott Bessent wants him to hike faster to strengthen the yen and calm American markets. The rate hike that pleased nobody The BOJ’s two-day policy meeting wrapped on September 18 with a 25-basis-point increase, lifting the benchmark rate from 1% to 1.25%. The vote was 7-2, with the dissenters being appointees aligned with Takaichi’s growth-first agenda. Markets responded with a collective shrug tilted toward skepticism. The yen weakened by roughly 1% following the announcement, drifting to around 157-158 per dollar. The market’s logic is straightforward: if two of seven board members are already pushing back at 1.25%, how much higher can rates realistically go? Governor Ueda framed the decision around inflation dynamics, noting that underlying price pressures are approach...