Bank of Japan Raises Policy Rate to 0.75%, Bitcoin Rises Above $87,000, Yen Weakens
The Bank of Japan (BOJ) raised its short-term policy rate by 25 basis points to 0.75%, marking the highest level in almost 30 years. This move, anticipated by the markets, led to muted immediate reactions as expectations had already been priced in.
Following the decision, the Japanese yen weakened from 155.67 to 156.03 per US dollar. Despite the rate hike, no panic occurred in yen carry trades, with Japanese government bond yields rising steadily. Traders had maintained long yen positions for weeks, which contributed to the subdued yen response post-announcement.
Bitcoin's price increased, trading near $87,000 with intraday highs approaching $87,500, up from approximately $86,000.
The BOJ’s policy statement indicated a gradual normalization away from decades of ultra-loose policy. However, real interest rates remain negative after adjusting for inflation. The central bank highlighted inflation rates above 2% for an extended period, driven by import costs and stronger domestic price dynamics.
