BOJ to Raise Interest Rates, Bond Yields Hit 18-Year High

The Bank of Japan, led by Governor Kazuo Ueda, is poised to increase interest rates in December 2025 after years of ultra-loose monetary policy.

This rate hike marks a strategic shift, impacting bond markets with rising yields and influencing global financial sentiment, potentially affecting speculative assets, including cryptocurrencies.

BOJ to Raise Interest Rates, Bond Yields Hit 18-Year High

Kazuo Ueda, the Governor of the Bank of Japan, has confirmed a shift from ultra-loose monetary policy, which has dominated Japan’s financial landscape for nearly ten years. The last time the 10-year JGB yield was this high was during 2006, showcasing a major change in Japan’s economic strategy. Officials, including Prime Minister Sanae Takaichi, back the move, indicating strong government support for controlling inflation over maintaining low rates.

The BOJ is poised to increase its policy rate from 0.5% to 0.75% by December 2025. Such a change aims at stabilizing surging inflation rates within the country. Bond markets are bracing for potential volatility and liquidity shifts due to this rate hike, given the 10-year JGB yield surge to approximately 1.93%. Experts foresee challenges for risk-sensitive markets as Japan takes this financial step.

“I believe it is necessary that the bank continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvement in economic activity and prices.” — Kazuo Ueda, Governor of Bank of Japan

Impact on Global Markets and Cryptocurrency Trends

Did you know? The last time Japan raised interest rates was in 2006, marking a significant shift in its monetary policy.

Ethereum (ETH) is valued at $3,200.64, with a market cap reaching 386.30 billion as reported by CoinMarketCap. ETH saw a 4.53% rise over 24 hours and a weekly gain of 5.72%. The crypto market, although currently stable, remains vigilant amidst broader financial shifts.

Market experts point to global financial reactions, where interest rate increases often reduce appetite for speculative assets like cryptocurrencies. Governor Ueda has emphasized a data-dependent approach, factoring in both local and international market conditions. The Coincu research team highlights potential regulatory and financial market adaptations from this BOJ policy, pointing to likely influences on both domestic and international financial conditions. Adjustments such as these are expected to have widespread implications across multiple markets.