Bank of Japan Raises Interest Rate to 0.75%

TLDR

• BoJ raised interest rate by 25 basis points to 0.75%.
• Inflation in Japan is rising towards the 2% target.
• Market analysts predict potential impacts on Bitcoin and Ethereum.

On December 19, 2025, the Bank of Japan (BoJ) increased its key short-term interest rate by 25 basis points to 0.75%, the highest level since 1995. This unanimous decision raised the interest rate from the previous 0.5%, held through October and November 2025. The move signals a departure from over 20 years of ultra-low interest rate policies by the BoJ.

The decision was made during the Monetary Policy Meeting, led by BoJ Governor Kazuo Ueda. Governor Ueda emphasized that the underlying economic conditions now support a rate hike. Prior to this meeting, board members Naoki Tamura and Hajime Takata had dissented in October, favoring an earlier increase to 0.75% in a 7-2 vote.

Interest Rate Decision and Economic Factors

The decision to hike rates comes as Japan’s domestic consumption remains strong and inflation continues to rise towards the BoJ’s 2% target. An unnamed BoJ official noted the resilience in domestic consumption and the acceleration of underlying inflation. The administration led by Prime Minister Sanae Takaichi has also revised GDP growth projections to 0.7% for the fiscal year 2025.

Governor Ueda communicated that the BoJ carefully weighed the “pros and cons” of raising rates during their December meeting. Board member Tamura also expressed support for further rate increases, suggesting that the BoJ should continue adjusting the degree of monetary accommodation based on economic conditions.

Impact on Bitcoin and Cryptocurrency Markets

The recent BoJ interest rate hike may have implications for global financial markets, including cryptocurrencies. Although there is no direct data from primary sources, the yen carry trade unwind could potentially apply pressure on risk assets such as Bitcoin (BTC) and Ethereum (ETH). These assets have historically been influenced by changes in yen carry trades.

Market analysts are watching closely to see if Bitcoin will mirror historical trends of declining 20-30% after major interest rate hikes. However, there is no confirmed data on prior BTC crashes following similar actions by the BoJ or other central banks.

Broader Financial and Market Reactions

While the BoJ’s decision does not involve explicit cryptocurrency allocations or institutional impacts, changes in Japan’s interest rates can affect global liquidity. The move could strengthen the Japanese yen, affecting the appeal of other investment assets. However, there is currently no specific on-chain data or exchange activity to confirm direct impacts on cryptocurrencies like BTC and ETH.

Financial observers and stakeholders will be monitoring subsequent BoJ meetings and policy directions for further cues. The yen-funded trade dynamics, including possible impacts on decentralized finance and governance tokens, remain unconfirmed without new primary data emerging from crypto analysis platforms.