BOJ Signals More Rate Hikes as Japan’s Real Rates Stay Lowest Among Peers
The Bank of Japan raised its policy rate to 0.75% — the highest since 1995 — and board members signalled the possibility of further hikes. Officials said Japan’s real policy rate remains among the lowest globally, supporting arguments for continued normalization. Internal BOJ estimates place the neutral rate in a wide 1.0%–2.5% range, though officials stress its imprecision and favour a flexible, data-driven approach. Rising long-term yields are a key concern: 10-year JGB yields climbed to about 1.97%, an 18-year high. Officials pointed to a weak yen and stronger import-price pass-through as drivers of domestic inflation, strengthening the case for tightening if data warrant. Politically, Prime Minister Sanae Takaichi has eased earlier criticism of tighter policy while seeking to avoid disruptive yield spikes as she prepares the 2026 budget. Traders should watch BOJ meetings, JGB yields and yen moves: further BOJ hikes could tighten global financial conditions, push up yields, strengthen the yen, and pressure risk assets including major cryptocurrencies. Primary keywords: Bank of Japan, BOJ rate hike, JGB yields, yen, monetary policy. Secondary/semantic keywords: neutral rate, inflation pass-through, policy normalization, global financial conditions.
Bearish
Further BOJ tightening and higher JGB yields increase the cost of carry and raise global risk-free rates, which historically weigh on risk assets including major cryptocurrencies. A stronger yen and higher yields can reduce liquidity and risk appetite among international investors, prompting outflows from crypto markets and downward pressure on prices in the short term. In the medium to long term, persistent BOJ tightening that tightens global financial conditions could slow macro liquidity growth and lower speculative capital available to crypto. However, the immediate impact will depend on the scale and pace of hikes, yen moves, and whether other central banks shift policy in response. Traders should monitor BOJ guidance, JGB yields, dollar/yen volatility, and liquidity indicators to time positions and manage risk.