The Bank of Japan (BoJ) has just decided to raise interest rates by another 0.25 percentage points.

The Bank of Japan (BoJ) has just decided to raise interest rates by another 0.25 percentage points, bringing them to their highest level in three decades, amid persistent inflationary pressures. Inflation in Japan has exceeded the 2% target for 44 consecutive months, reaching 2.9% in November, while the yen remains weak, fluctuating around 154–157 yen per US dollar.

The Bank of Japan (BoJ) emphasized that real interest rates remain negative, as the nominal rate of 0.75% is significantly lower than current inflation. This suggests that monetary policy remains generally supportive, aiming to encourage consumption and investment rather than hoarding cash. The central bank also expects businesses to continue raising wages next year, following the strong growth seen in 2025, thus reinforcing the positive cycle between income and spending. This move was somewhat anticipated by the market, and investors believe the BoJ may raise interest rates again in 2026, bringing the rate closer to 1%.

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