BoJ Rate Hike Disappoints Investors, Yen Continues Descent

The Bank of Japan (BoJ) has raised its benchmark interest rate to 1.25% from 1%, marking its highest level in about three decades, as reported by the BBC on September 18, 2026.

The move was widely expected as Japan continues to unwind years of ultra-loose monetary policy.

However, the rate hike was underwhelming and weighed on the Japanese yen, causing it to weaken sharply as investors focused on the lack of a clearly hawkish message from the central bank.

The U.S. dollar climbed following the Fed rate hike, putting the yen on track for its biggest one-day decline since December and its strongest weekly loss since September 2024.

Dissent among policymakers has raised questions about how quickly the BoJ may be willing to tighten policy from here, with two officials opposing the rate increase.