BOJ Is Set to Raise Benchmark Rates to Highest Level Since 1995

Governor Kazuo Ueda is widely expected to raise the Bank of Japan’s key rate to the highest level in three decades on Friday. The path ahead becomes murkier as the government’s need for cheap financing clashes with a weakening yen that’s driving up import prices.

New Prime Minister Sanae Takaichi — who last year described the idea of a rate hike as “stupid” — is now contending with a cost-of-living squeeze that’s eroded support for her ruling party. Japan’s first female prime minister has refrained from criticizing Ueda’s plans to dial back monetary easing since she took office in October as she prioritizes the inflation fight.