Bank of Japan raises interest rate to 1.25 percent, highest in 31 years, as yen weakens

On September 21-22, 2026, the Japanese yen weakened against the US dollar, extending losses after the Bank of Japan raised its benchmark interest rate to 1.25 percent, the highest in 31 years, but signaled caution with two dissenting votes. The yen traded at 157.70 per dollar, down from a seven-month high earlier in September. The Federal Reserve and European Central Bank also raised rates this month, and markets expect further hikes. Traders remain alert for possible Japanese intervention, as the yen had previously fallen to a four-decade low in July before coordinated action by Tokyo and Washington.