Fed Triggers BOJ Push Toward 1.25% Rate, Yen Hits ¥156

Markets have not seen the Fed, ECB and BOJ all hiking in the same quarter since mid-2006, when the Fed topped out at 5.25% and the BOJ lifted rates to 0.25%—a sequence that ended abruptly with the 2007–08 credit crash. The 2026 reprise signals a potential end to the 30-year era that turned the yen into the world’s preferred funding currency after the 1998 Asian crisis and the BOJ’s deflation fight of the 2000s. Bloomberg’s framing stresses U.S.–Japan rate differentials but downplays how Japan’s demographics, wage inertia and energy imports limit aggressive tightening; conversely, Reuters’ coverage may understate the political risk of another costly FX intervention. If Tokyo really normalises toward its 1.1–2.5% “neutral” rate while Washington hovers near 4%, the global carry-trade machinery that has recycled Japanese savings into foreign debt since the 1990s could unwind, reshaping capital flows for decades. Yet the 2006 precedent shows that a synchronized hiking cycle can reverse quickly if growth falters, so this episode may either mark a historic break from ultra-low Japanese rates or another short-lived detour in the long post-Plaza Accord journey toward exchange-rate stability.