BoJ Rate Hike Sparks JPY Weakness as BoE Holds Off

Yesterday's BoJ meeting saw the central bank raise its policy rate by 25 bps to 1.25%, marking the sixth hike under Governor Ueda.

This decision was widely anticipated, but what caught market attention was the composition of the vote.

Two board members, typically aligned with PM Takaichi's more cautious stance on tightening, dissented from the majority.

The resulting split led to a dovish interpretation of the rate hike, causing the JPY to weaken rather than strengthen against the USD, pushing USD/JPY toward ¥157.

This move follows pressure from US Treasury Secretary Scott Bessent, who has been vocal about pushing Japan toward more decisive tightening to support its currency.