Bitcoin BTC$86,817.46 The yen rose as the yen weakened after the Bank of Japan (BOJ) raised interest rates as expected.
Japan’s central bank raised short-term policy interest rates by 25 basis points to 0.75%, the highest level in nearly 30 years, continuing a gradual shift away from decades of ultra-easy monetary policy.
The Bank of Japan acknowledged in its policy statement that inflation has remained above its 2% target for an extended period due to rising import costs and strong domestic price trends. However, policymakers stressed that inflation-adjusted interest rates remain negative, suggesting financial conditions will remain accommodative even after the hike.
After the interest rate decision, the Japanese yen fell from 155.67 yen to 156.03 yen to the dollar. Bitcoin, the top cryptocurrency by market value, rose from $86,000 to $87,500 before recovering slightly and trading at nearly $87,000 at the time of writing, according to data from CoinDesk.
The market reaction was in line with expectations, as the rate hike was already expected and largely priced in. Additionally, speculators had held long positions in the Japanese yen for several weeks, preventing a sharp yen-buying reaction following the announcement of a rate hike.
In recent weeks, some observers have expressed concern that a rate hike could strengthen the yen, triggering an unwinding of yen carry trades and widespread risk-off sentiment. But CoinDesk debunks these concerns, pointing to the already bullish positioning of the yen in foreign exchange markets and an upward trend in Japanese government bond yields, both of which indicate there is little sign of panic over an impending rate hike.
