Bank of Japan may raise interest rates twice by March as inflation accelerates
Bank of Japan (BOJ) may raise interest rates twice by March, according to former BOJ board member Makoto Sakurai. In a June 19 interview, Sakurai said the BOJ could hike again in October 2026 and then by March 2027, if inflation accelerates sharply.
This follows the BOJ’s recent shift. On June 16–17, the BOJ voted 7-1 to raise its benchmark short-term rate by 25 bps, moving it from 0.75% to 1%—the highest level since September 1995. It was only the second rate increase since December 2025, part of the BOJ’s broader exit from near-zero policy begun in March 2024.
A key catalyst is inflation tied to the Iran conflict. Energy prices have risen across Asia, and Japan—largely dependent on imported energy—faces added pressure. The next two hikes could lift the policy rate to around 1.5% by March 2027.
For markets, the BOJ tightening matters because it tends to strengthen the yen. That can reduce the attractiveness of yen carry trades, where investors borrow in JPY and fund higher-yield assets, including risk assets such as equities and crypto. The article points to a preview in mid-2024, when a modest BOJ adjustment triggered global volatility and a notable Bitcoin sell-off.
Traders should watch BOJ communications—especially around the October meeting—for signs that Sakurai’s “two more hikes” scenario is gaining probability.
Bearish
This news is likely bearish for crypto risk assets because additional Bank of Japan tightening can strengthen the yen and pressure yen-funded carry trades. When global funding costs shift higher in JPY terms, investors often de-risk: positions get unwound, liquidity tightens, and risk assets like crypto can face sell pressure.
The article frames a specific path: Bank of Japan may raise interest rates twice by March (October 2026 and March 2027) if inflation accelerates, with the policy rate potentially rising toward ~1.5%. Even though this is conditional, it can reprice expectations quickly. In the short term, traders may move to hedge FX or reduce exposure to BTC as BOJ guidance and bond-rate expectations change.
Historically, rate-hike cycles or hawkish repricing by major central banks have often coincided with volatility in risk markets. The article itself references mid-2024, when a smaller BOJ adjustment contributed to global volatility and a Bitcoin sell-off—an analogue for how incremental hawkish steps can spill over into crypto.
In the long run, if BOJ hikes are sustained and Japan’s inflation narrative becomes entrenched, it can keep USD/JPY dynamics supportive of JPY and structurally reduce carry-driven demand for high-beta assets. That said, if inflation surprises ease or BOJ signals turn less aggressive, the bearish pressure could fade; hence the impact is negative but not a guaranteed one-way move.