Bank of Japan Raises Interest Rate to 0.75%

TLDR

• Interest rate raised by 25 basis points to 0.75%.
• Second rate hike in 2025, first was in January.
• Ueda’s leadership marks a shift from ultra-loose policy.

The Bank of Japan raised its key short-term interest rate by 25 basis points in December 2025. This decision brought the rate to 0.75%, a level last seen in September 1995. The rate hike marks the second increase of the year, following a previous hike in January 2025.

Kazuo Ueda, the BOJ Governor, has led these policy adjustments since assuming office in April 2023. This shift signifies a departure from the BOJ’s long-standing ultra-loose monetary policy. Ueda’s role includes assessing potential outcomes from changing interest rates during challenging economic conditions.

Background on Recent BOJ Policy Changes

In January 2025, the BOJ first raised its short-term interest rate to 0.50% from previous levels. This was part of a gradual normalization approach anticipated by market participants. The implications of these rate adjustments on yen value and potential cryptocurrency impacts remain under discussion.

The BOJ’s decision reflects broader economic goals under Ueda’s governance. Discussions around these changes happened amidst global economic predictions, particularly assessing U.S. tariff effects. While additional statements from BOJ members and Ueda aren’t available, the rate hike is clearly noted.