Three BoJ Members Back an Immediate Hike; Yen Gains as Bitcoin Softens
The Bank of Japan's policy meeting on Tuesday strengthened market conviction that borrowing costs could rise by the end of the second quarter. The yen firmed on the shift, while bitcoin stayed on the back foot.
As expected, the BoJ left its policy rate unchanged at 0.75%. The vote was not unanimous: three board members favored raising rates at this meeting, producing a 6–3 split—the widest dissent since Kazuo Ueda became governor. The decision is being read as a sign that support for higher rates is spreading within the board.
The central bank also lifted its core inflation forecast for the current fiscal year to 2.8%, while cutting its growth outlook to 0.5% from 1%.
Officials' more hawkish tone is tied in part to war-related disruption risks to energy flows through the Strait of Hormuz, which have pushed global energy prices higher and intensified inflation pressures in energy-importing economies such as Japan.
Markets moved quickly: traders priced a 74% probability of a rate increase on June 16. Bloomberg News reported that BoJ watchers had broadly anticipated a June hike even before the announcement.
The yen strengthened, sending USD/JPY down nearly 0.5% to 158.95—a notable move among major currencies. Rate hikes, or the prospect of them, typically support a currency.
In crypto, BTC/JPY on bitFlyer slipped 0.6% to 12.28 million yen, broadly in line with softness in dollar-based bitcoin prices, according to TradingView.
Yen moves draw close attention because the currency has long served as a funding source. Persistent yen strength is often linked to risk-off behavior, reflecting the potential unwinding of yen-funded carry trades—positions built when investors borrowed cheaply in yen during the BoJ's years of ultra-low rates and deployed capital into higher-yielding assets abroad.
Carry-trade unwinds were widely cited as a drag on global risk assets in August 2024, when bitcoin dropped from $65,000 to $50,000 within a week. With June hike expectations rising again, some fear a repeat episode of carry-driven risk aversion.
Recent flow data points the other way. February figures show Japan continued adding to U.S. Treasury holdings, suggesting yen-funded strategies remain in place. "Japan, the largest foreign holder, raised its stockpile by +$14 billion, to $1.24 trillion, the highest since February 2022. This marks Japan's 13th monthly purchase of the last 14 months, as Japanese institutions continue chasing higher yields overseas," the founders of newsletter service LondonCryptoClub said. "As we have said, there is no “JPY carry unwind” trade. Those who are talking about that don't understand how Japanese investors operate and you should ignore them," they added.
