The Bank of Japan raised its benchmark interest rate by 25 basis points to 1%, its highest level since 1995.
Bitcoin (BTC) recovered from early losses during Asian trading after the central bank delivered a widely expected rate hike to a 31-year high as part of its ongoing effort to curb inflation.
The decision, announced at around 3:19 UTC on June 16, lifted rates from 0.75% to 1%. While the move was largely priced in, policymakers also signaled the potential for further tightening while seeking to reassure markets about financial stability.
The BOJ pointed to increasing upside risks to inflation, noting that higher oil prices are being passed through to consumers more quickly than expected amid geopolitical uncertainty. That suggests the central bank may continue raising rates if price pressures persist.
Japan, which has long struggled with low inflation, is now seeing stronger price growth, with wholesale inflation rising more than 6% year-on-year in May, the fastest pace in three years. Headline inflation was 1.4% in April, still below the BOJ’s 2% target.
Following the announcement, Bitcoin rose from about $65,600 to around $66,000. At the same time, the Japanese yen slipped slightly against the U.S. dollar.
Rate hikes are typically viewed as negative for risk assets like cryptocurrencies, especially from the BOJ, whose ultra-loose policy had long supported global liquidity and asset prices.
However, Bitcoin’s rebound appeared to be driven by a more dovish detail in the statement: the BOJ’s decision to pause its bond tapering program.
By holding monthly Japanese government bond purchases steady at around 2 trillion yen from April 2027, the central bank signaled it may limit upward pressure on long-term yields. This move helped ease concerns about rising borrowing costs and provided some support to broader financial markets.
While the rate increase itself was expected, the softer stance on bond purchases likely reassured investors and contributed to Bitcoin’s recovery.
