BOJ Hits 1.25%, Yen Dips to 156.70 — $BTC Climbs to $77,400 Anyway 🌐

The Bank of Japan raised its benchmark interest rate by 25 basis points on Friday, lifting the policy rate to 1.25%, the highest level in 31 years, citing risks that inflation will move above the central bank's 2% target amid rising import costs and energy prices. The hike is the BOJ's second increase in three months and follows public pressure from U.S. Treasury Secretary Scott Bessent, who argued that an orderly yen market benefits Treasury stability and defended coordinated yen-buying intervention as serving U.S. interests.

Bitcoin's dollar-denominated price jumped to $77,400 following the announcement, extending its rebound from an overnight low of $76,200, according to CoinDesk data. On Tokyo-based bitFlyer, the BTC/JPY pair climbed 0.5% to JPY 12,060,000 after the rate decision.

The Japanese yen weakened against the U.S. dollar in response, with USD/JPY rising to 156.70 from 156.20. Observers have long noted that BOJ rate decisions and yen movements influence global markets because Japan's prolonged era of near-zero interest rates encouraged traders to borrow in yen to fund higher-yielding investments elsewhere, a dynamic that has fed fears an unwind of the carry trade could roil risk assets. Those concerns surfaced during the early August 2024 equity and bitcoin sell-off, though analysts note Japanese rates remain far below U.S. levels, preserving a wide yield gap that keeps yen-funded carry trades attractive. The Federal Reserve raised its benchmark rate by 25 basis points to a target range of 3.75%–4.00% earlier this week, its first hike since 2023, and investment banks including Goldman Sachs and Morgan Stanley now expect another Fed increase in October.