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    "parsed_content": "AdvertisementSKIP ADVERTISEMENTSupported bySKIP ADVERTISEMENTJapan Raises Interest Rates in a Decision Muddied by U.S. PressureThe Bank of Japan\u2019s widely expected move followed an unusual campaign by Treasury Secretary Scott Bessent for higher rates.Listen \u00b7 6:13 min Share full articleThe Bank of Japan governor, Kazuo Ueda, indicated that underlying inflation was approaching the central bank\u2019s 2 percent target after months of steady signals.Credit...Kazuhiro Nogi\/Agence France-Presse \u2014 Getty ImagesBy River Akira DavisReporting from TokyoPublished Sept. 17, 2026Updated Sept. 18, 2026, 4:59 a.m. ETSee more of our coverage in your search results.Encuentra m\u00e1s de nuestra cobertura en los resultados de b\u00fasqueda. Add The New York Times on GoogleAgrega The New York Times en Google The Bank of Japan raised interest rates on Friday in a closely watched move that followed unusual scrutiny by the Trump administration.Japan\u2019s central bank moved its policy rate from 1 percent to 1.25 percent, the highest level in 31 years in a country that has long combated stagnant prices with near-zero interest rates.Markets had widely expected the bank to raise rates at its September meeting, as prices in Japan have climbed steadily in recent years. It followed rate hikes from the Federal Reserve on Wednesday and the European Central Bank last week, as countries grapple with rising energy prices from the war in the Middle East.U.S. Treasury Secretary Scott Bessent publicly pressured Tokyo to tighten policy. Speaking at an event in Texas last week, Mr. Bessent even suggested that he had inside knowledge of the bank\u2019s plans to raise rates.AdvertisementSKIP ADVERTISEMENTThe Bank of Japan \u201calready had very good reason to raise interest rates,\u201d said Izumi Devalier, Bank of America\u2019s chief Japan economist. But recent rhetoric from the United States creates the impression that Japan\u2019s central bank, which is independent by law, \u201cwas co-opted into policy,\u201d she said. \u201cIt\u2019s not good for monetary policy.\u201dBank of Japan policy rate\n \n \n \n \n Source: FactSet.By The New York TimesAt the same time, the Japanese government has pushed in the opposite direction. Prime Minister Sanae Takaichi has leaned on the Bank of Japan to keep interest rates low as she seeks to fund higher government spending without alarming investors about Japan\u2019s ability to pay its debts. This month, yields on 10-year Japanese government bonds climbed to a three-decade high.Seven of the Bank of Japan\u2019s nine board members voted to raise interest rates. The two dissenters were both appointed by Ms. Takaichi.At a news conference on Friday, the Bank of Japan governor, Kazuo Ueda, declined to comment on Mr. Bessent\u2019s remarks about Japanese economic policy. While preserving the central bank\u2019s independence, he said, \u201cit is important to maintain close coordination\u201d with the government.AdvertisementSKIP ADVERTISEMENTThe Takaichi administration\u2019s push for lower rates has put it at odds with Mr. Bessent. He has relayed frustrations to Japan\u2019s finance minister about low interest rates weighing on the yen. The Japanese currency fell to a multi-decade low against the dollar, as higher interest rates in the United States drew capital out of Japan.In July, the United States and Japan jointly intervened in the foreign exchange market to prop up the Japanese currency. Mr. Bessent followed the intervention by saying in an interview that he was sure the Bank of Japan would \u201cdo the right thing\u201d at its upcoming meeting.Mr. Bessent escalated that rhetoric in recent weeks, daring traders to bet against the yen. \u201cWhen we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do,\u201d he said at an event at Southern Methodist University. \u201cI am the house now,\u201d he said.ImageU.S. Treasury Secretary Scott Bessent has relayed frustrations to Japan\u2019s finance minister, Satsuki Katayama, right, about low interest rates weighing on the yen.Credit...Pool photo by Rodrigo Reyes MarinJapan\u2019s finance minister, Satsuki Katayama, said that Mr. Bessent\u2019s remarks sounded \u201ca bit scary\u201d when translated into Japanese.AdvertisementSKIP ADVERTISEMENTFor months, Mr. Ueda has signaled that so-called underlying inflation \u2014 the long-term rate of price changes after excluding temporary shocks \u2014 is nearing the central bank\u2019s 2 percent target.\u201cNow that underlying inflation is at 2 percent, you actually want to be much more vigilant about upside inflation risks,\u201d said Ms. Devalier. That is because \u201cnow you have to contend with the risk that inflation doesn\u2019t stop at 2 percent; it just continues to head higher and overshoots the target,\u201d she said.The main inflation risks now are a weaker yen, which makes imports more expensive, and higher prices stemming from turmoil in the energy markets. Japan has historically purchased virtually all its oil from the Middle East, but this year has been forced to turn to more expensive supplies from the United States and elsewhere.Oil prices have soared to over $100 a barrel in recent days over fears that a drone attack on a critical pipeline in Saudi Arabia could further disrupt Persian Gulf energy supplies.ImageA wholesale market in Tokyo. For most of the past four years, inflation has remained above the Bank of Japan\u2019s 2 percent target.Credit...Andrew Caballero-Reynolds\/Agence France-Presse \u2014 Getty ImagesMr. Ueda said on Friday that the Bank of Japan would continue to set monetary policy with the goal of \u201cestablishing a firm foothold\u201d at its 2 percent underlying inflation target. Currency developments and impacts from the Iran war were among factors expected to push inflation higher over the medium and long term, he said.AdvertisementSKIP ADVERTISEMENTMarcel Thieliant, head of Asia Pacific at the economic research firm Capital Economics, said he expected the Bank of Japan to tighten policy more rapidly than most anticipate in the coming months. But Ms. Takaichi\u2019s efforts to steer the Bank of Japan to keep interest rates low \u201cbore fruit,\u201d he said, with her two appointees voting to leave rates unchanged. With the two most hawkish board members set to depart next July, its composition could tilt further against rate increases, Mr. Thieliant said.In the weeks leading up to the meeting, the yen had strengthened against the dollar in anticipation of a rate increase. The Japanese currency weakened slightly on Friday, as analysts said the two dissenting votes raised doubts about the pace of further tightening.Takahide Kiuchi, executive economist at Nomura Research Institute, said competing pressures from Washington and Tokyo could ultimately give the central bank greater freedom to act.AdvertisementSKIP ADVERTISEMENT\u201cTreasury Secretary Bessent\u2019s remarks might function less as direct pressure on the B.O.J. and more as a check on the Takaichi administration, which has been quietly restraining B.O.J. rate hikes behind the scenes,\u201d Mr. Kiuchi said. As a result, the Bank of Japan \u201cis effectively gaining a free hand to execute rate hikes or accelerate their pace.\u201dAdvertisementSKIP ADVERTISEMENT",
    "published_at": "2026-09-18T03:15:30+00:00",
    "author_name": "River Akira Davis",
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    "ai_headline": "Japan Raises Interest Rates in a Decision Muddied by U.S. Pressure",
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    "ai_excerpt": "The Bank of Japan raised interest rates to 1.25 percent, the highest in 31 years, a move widely expected but complicated by public pressure from U.S. Treasury Secretary Scott Bessent. This decision comes as Japan grapples with rising inflation and a weakening yen.",
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