Ueda’s guarded stance highlights limits of BOJ’s policy shift

Bank of Japan Gov. Kazuo Ueda addresses a news conference after the bank's policy meeting in Tokyo on Friday. | REUTERS

Sep 22, 2026

It was always going to be a stretch for Bank of Japan Gov. Kazuo Ueda to sound very hawkish. Given that officials have tightened cautiously the past two years, something major would have to change to hike interest rates at a faster pace.

There’s little to suggest he’s eager to ditch the incremental approach. One of the most eagerly anticipated BOJ decisions in recent years risks satisfying nobody. Friday’s rate increase, by a quarter point to 1.25%, had looked like a slam-dunk. But even that relatively modest step ran into resistance from a couple of policymakers.

Traders wanting a more forthright signal that additional moves are in the works will be disappointed; the yen sold off as soon as the decision was announced. U.S. Treasury Secretary Scott Bessent, who joined Tokyo in intervening to support the Japanese currency, had piled pressure on the BOJ to stem the yen’s steep decline. The sharp rally after the joint U.S.-Japan effort in July needed an added extra to retain momentum. Bessent implied something special was in the works, asserting that he had information that the market didn’t. If so, it didn’t come last week. He was bullish to a fault.

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