What the Bank of Japan Just Did

The Bank of Japan raised its key interest rate by 25 basis points to 1.25%—that’s the highest it’s been in 31 years. This is the second hike in three months, marking the fastest pace of monetary tightening since 1990.

Market Reaction: Yen and Crypto

The move was almost fully priced in by markets: USD/JPY jumped to 157, and Bitcoin broke above $77,000. Traders had already anticipated the hike before the meeting, so the yen didn’t see a sharp rally.

Carry Trade Still in Play

The big risk for crypto? A potential unwind of carry trades, where investors borrow cheap yen and park it in higher-yield assets—including crypto. With the US-Japan rate gap still wide—3.75–4% versus 1.25%—carry trades remain attractive for now.

What to Watch from Ueda’s Speech

Bank of Japan Governor Kazuo Ueda is set to speak at 6:30 UTC. If his tone turns more hawkish and the yen strengthens sharply, it could trigger a wave of carry trade unwinds and a rush out of risk assets.