The yen has again dealt a heavy blow to the U.S. dollar, sending gold and U.S. stocks sharply higher while pushing U.S. Treasury yields lower—but the Bank of Japan has signaled it did not intervene. So who else could have done it?

If no entity claims responsibility for this market move, then the only plausible explanation is that short sellers were spooked by news developments. In reality, short sellers broadly understand that the yen will eventually appreciate—it’s merely a question of timing. Persisting stubbornly in their positions could lead to outcomes similar to George Soros’s campaign against the Hong Kong dollar: surrendering earlier gains or even incurring losses. So what news triggered this shift? U.S. Treasury Secretary Scott Bessent reportedly told Japanese Finance Minister Kayo Katsuragi that Japan should raise interest rates next; he separately conveyed the same view to Bank of Japan Governor Kazuo Ueda. Less than a day earlier, Bessent had given two interviews—both times hinting that the Bank of Japan needed to "do the right thing." The pressure on the yen stems from interest-rate differentials: borrowing yen at 2% to buy U.S. Treasuries yielding over 4%, then repatriating funds to profit from the spread when the differential fluctuates. If the U.S. floods the market with euros to buy yen—and Japan simultaneously dumps dollars to buy yen—that’s effectively equivalent to handing money away. As long as the interest-rate differential persists, exchange-rate pressure cannot be eliminated. From the outset, Bessent has urged Japan to raise rates to narrow the differential once and for all. But recall how aggressively and frequently the Federal Reserve hiked rates post-pandemic? Yes—it pushed banks into failure. To avoid damaging the financial system, the Bank of Japan can only raise rates gradually and modestly, giving banks time to adjust. Now Bessent has reiterated that Japan must hike rates—propping up the currency through intervention alone is unsustainable. How has Japan responded? A rate hike in September is highly likely—and hawkish BOJ officials have signaled they intend to accelerate both the pace and magnitude of tightening, no longer tolerating provocations from short sellers.

A hawkish Bank of Japan policymaker says: raise rates every few months, targeting a neutral policy rate of 2%.

Japan’s most hawkish central bank official has called for accelerating the pace of rate hikes and steering policy rates toward a neutral level of 2%. Naoki Tamura, a member of the Bank of Japan’s Policy Board, delivered a speech on Thursday explicitly urging the central bank to raise rates once every few months and gradually lift the policy rate toward its estimated neutral level of 2%. Meanwhile, Deputy Governor Ryozo Himino noted that the global AI boom has driven a sharp rise in Japan’s export prices—offsetting the drag on the economy from rising oil prices—and significantly reducing downside risks to growth. Last week, the Bank of Japan raised its policy rate to 1%, the highest level since 1995. According to a Bloomberg survey, roughly 90% of economists expect another rate hike before year-end—more than half anticipate it in December, while 36% expect it in October. Naoki Tamura: Hike every few months; “without hesitation” accelerate if upside risks intensify Speaking at a meeting with local business leaders in Hyogo Prefecture on Thursday, Tamura clearly laid out his envisioned path for monetary tightening. "My baseline scenario envisions raising rates by 25 basis points every few months, gradually approaching the neutral rate of 2%," Tamura said. He added that more decisive action would be necessary if inflationary upside risks intensified: "If the likelihood of price increases rises further, I believe we must accelerate the pace of rate hikes—without hesitation—by either increasing frequency or magnitude." He specifically cited factors such as Middle East conflicts as potential drivers of higher inflation. Tamura is widely regarded within the BOJ as its most hawkish policymaker. Previously employed by Sumitomo Mitsui Financial Group, he has long advocated for faster normalization of interest rates. At the April meeting, he voted alongside Hajime Takata and Junko Nakagawa in favor of a higher rate—adding a hawkish dimension to the board’s otherwise dovish decision to hold rates steady. In last week’s rate-hike decision, he joined all other members in voting to raise the policy rate to 1%. Notably, while Tamura’s remarks suggest a potentially faster hiking pace than mainstream market expectations, they also imply he is unlikely to support another hike in July—unless inflationary pressures become imminent and acute. AI-driven exports surge in both volume and price, offsetting oil-price shocks Tamura’s hawkish stance finds support in macroeconomic data. Citing Bank of Japan data, Bloomberg reported that Japan’s export price index rose 11.7% year-on-year in May—the largest increase since April 1979.

Some BOJ Policymakers Signal Need to Raise Rates Soon, April Meeting Summary Shows

May 11, 2026

A summary of the Bank of Japan's April meeting reveals some policymakers believe interest rates should rise soon due to inflationary risks from soaring oil prices. While the short-term policy rate stayed at 0.75%, three members pushed for acceleration if price increase risks heighten.

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