Bank of Japan raises rates to 1% amid inflation concerns, tempering Bitcoin dip

The Bank of Japan lifted its short‑term policy rate to 1%, the highest level since 1995, on June 16 as part of its move away from near‑zero interest rates. The decision, taken amid a surge in wholesale inflation and lingering energy‑price pressures, was announced by Deputy Governor Shinichi Uchida while Governor Kazuo Ueda recovered from a hospital stay. Former board member Makoto Sakurai warned that a second hike could come by year‑end and another by March, potentially taking the rate toward 2% before the end of Governor Ueda’s term.

The rate increase broke the usual pattern of Bitcoin price crashes that followed previous BOJ hikes; after a brief dip, Bitcoin rebounded to around $66,000. Analysts attribute the muted reaction to a shrinking yen‑carry trade that previously funneled cheap yen into crypto and other risk assets, along with a tighter credit environment that reduces leverage‑driven sell‑offs.