BOJ Holds Rates at 0.75% as Nikkei and Crypto Markets Slip

• Bank of Japan holds rates at 0.75% as 2026 growth slows and inflation rises.
• Nikkei 225 drops 1.02% as sector losses outweigh strong individual stock gains.
• Bitcoin and Ethereum decline daily while XRP posts the steepest weekly loss.

The Bank of Japan (BOJ) set its monetary policy stance on Tuesday with a 6–3 majority vote to uphold the uncollateralized overnight call rate at around 0.75%, a move that comes as financial markets in Japan and digital assets showed signs of short-term weakness.

The central bank projected that Japan’s economic growth will decelerate in fiscal 2026. The outlook attributes the slowdown to higher crude oil prices, which are expected to weigh on corporate profits and reduce households’ real income through worsening trade conditions.

However, the economy is still expected to expand moderately, supported by government measures, accommodative financial conditions, and sustained corporate profitability. Growth is projected to recover from fiscal 2027 as the impact of elevated energy prices fades and income-driven spending strengthens.

Inflation remains a key focus. The consumer price index, excluding fresh food, is projected to rise between 2.5% and 3.0% in fiscal 2026. This increase is largely driven by energy and goods prices, alongside ongoing efforts by firms to pass wage increases to consumers. In addition, inflation is then expected to ease to 2.0–2.5% in 2027 and stabilize around 2% in 2028.

Nikkei Declines as Sector Losses Weigh on Market

Japanese equities closed lower following the policy announcement, with the Nikkei 225 declining by 1.02%. Losses in the paper and pulp, transport, and communication sectors contributed to the decline.

Among individual stocks, Orix Corp., Shimizu Corp., and Kajima Corp. recorded gains of over 9%, while SoftBank Group, Nitto Denko, and Renesas Electronics posted losses ranging from 6.75% to 9.86%.

Crypto Markets Mirror Short-Term Weakness

Digital assets reflected a similar pattern of short-term declines. Bitcoin traded at $76,641.17, down by 1.36% over 24 hours, though it maintained a 0.58% weekly gain. Ethereum also declined 1.83% daily and 1.87% weekly.

XRP recorded the highest losses, falling by1.93% in 24 hours and 3.53% over the week. BNB followed with smaller declines.

Related: Japanese 10Y JGB Yields Hit 2.40% Multi-Decade High, Pressuring Bitcoin and Altcoins