In a significant move, the Bank of Japan (BoJ) has raised its key interest rates to 0.25% from the previous range of 0% to 0.1%. This marks only the second time since 2007 that Japan’s central bank has increased interest rates, signaling a shift in monetary policy. The decision comes ahead of the US Federal Reserve’s anticipated announcement on interest rates later in the day.
Alongside the rate hike, the BoJ announced plans to reduce its monthly purchases of Japanese government bonds to approximately 3 trillion yen per month during the January to March 2026 quarter. This gradual reduction, cutting about 400 billion yen each quarter, indicates a cautious approach to normalizing monetary policy. The central bank also projected that core inflation, excluding fresh food prices, would reach 2.5% by the end of the 2024 fiscal year and stabilize around 2% for the following two fiscal years.
While Japan moves towards tightening its monetary policy, all eyes are on the US Federal Reserve’s upcoming decision. Wall Street expects the Fed to maintain its benchmark interest rates within the 5.25% to 5.50% range. However, market participants are keenly watching for any hints that might suggest a potential rate cut in September, which could have significant implications for global financial markets.
The cryptocurrency market has shown mixed reactions to these developments. Bitcoin, the leading cryptocurrency, was trading just above $65,700 at the time of writing, down 1.5% in the last 24 hours. Interestingly, XRP stood out with a gain of over 8%, trading at $0.6488. As central banks continue to adjust their policies, the crypto market’s response to these macroeconomic shifts remains a point of keen interest for investors and analysts alike.
