Bank of Japan Raises Rates Amid US Pressure

Operation Save the Yen saw Japan's Bank of Japan raise interest rates for the first time in decades, bringing them to a 31-year high of 1.25%.

This move was expected by analysts and came after U.S. Treasury Secretary Scott Bessent repeatedly advocated for a stronger yen. The rate hike aims to curb depreciation of the Japanese currency and get inflation under control.

However, some experts point out that American pressure gave the BOJ a pretext to raise rates. Sayuri Shirai, a professor at Keio University, notes that until Bessent's statements, there was no clear direction on rate hikes.

The U.S. Treasury's support for the yen stems from Japan's inability to curb its weakness despite repeated unilateral interventions since 2022. The devalued yen presents concerns for the United States as it forces Japan to sell off U.S. Treasuries, potentially leading to a massive sell-off of these assets.