Bank of Japan Poised to Lift Rates to a 31-Year High; Crypto Markets on Alert

Japan's central bank is set to take a step it hasn't taken in decades. The Bank of Japan is expected to raise its benchmark rate to 1% at its June 15–16 policy meeting, a level last seen in 1995. The move would lift the BOJ's target for the uncollateralized overnight call rate from 0.75% to 1%. The last increase came in December 2025, when the rate was raised to 0.75%. Sticky inflation remains the central driver. A weaker yen has pushed up import costs, and higher energy prices—in part linked to ongoing geopolitical tensions in the Middle East—have intensified price pressures. Markets are largely aligned on the outcome. A Reuters poll showed 94% of economists expect a June hike, while market pricing implies more than an 80% probability. Some forecasters also see scope for another increase to 1.25% before the end of 2026. Leadership adds an extra wrinkle. BOJ Governor Kazuo Ueda is expected to miss the June meeting due to health issues, leaving Deputy Governor Shinichi Uchida to lead what could be one of the most consequential decisions in years. Beyond announcing a hike, Uchida is expected to refine the BOJ's forward guidance, potentially easing some of the hawkish tone seen in recent communications. Crypto traders are watching closely because BOJ policy has long been a major source of global liquidity. Japan's ultra-low rates made the yen a go-to funding currency for carry trades, where investors borrow cheaply in yen and rotate capital into higher-yielding assets, including crypto. Past BOJ tightening has at times coincided with notable Bitcoin pullbacks, with declines of 20–30% observed in some instances after rate increases. The July 2024 episode remains a key reference point: an unexpected BOJ hike helped trigger a yen carry-trade unwind that rippled through global risk assets—and Bitcoin was caught in the downdraft.