Key facts
- The Bank of Japan raised its policy interest rate to 1%, the highest in 31 years.
- U.S. Treasury Secretary Scott Bessent urged Japanese officials to raise the policy rate.
- Prime Minister Sanae Takaichi was initially cool to the idea of rate hikes.
The Bank of Japan raised its policy interest rate to 1% on Tuesday, marking the highest level in 31 years. This monetary tightening occurred despite Japanese Prime Minister Sanae Takaichi's initial reservations about increasing rates. The move appears to have been influenced, in part, by pressure from a member of another government, identified as U.S. Treasury Secretary Scott Bessent. Bessent reportedly urged Japanese officials to raise the policy rate to preempt potential economic and financial disruptions.