The Bank of Japan "raised interest rates by one tick to 0.75%", interest rates hit a 30-year high, and Bitcoin surged to $87,500

The Bank of Japan has decided to raise interest rates by one tick to 0.75%. Wage and inflation drive decision-making, and it will still adopt a gradual and data-oriented path of interest rate hikes in the future.
(Preliminary summary: Bloomberg analysts: Bitcoin may fall below 84,000 magnesium! Bulls were ambushed by "hawkish interest rate cuts", and the Christmas market was ruined)
(Background supplement: Where is the carnival of promised rate cuts? Interpretation of the Federal Reserve's "hawkish interest rate cuts" and the expansion of bond purchases that are not QE)

Contents of this article

Japan

The Bank of Japan (BOJ) It was officially announced earlier that it would raise the policy rate by 25 basis points to 0.75%, the highest level since the 1990s. This move symbolizes Japan's official departure from the long-term zero interest rate framework and sends a signal to the outside world: If the economy and prices maintain their current status in the future, the cycle of interest rate increases will continue.

The data push behind interest rate hikes

The key to driving decision-making is the formation of a virtuous cycle between inflation and wages. Core CPI has been above 2% for three consecutive years, and the BOJ estimates it could still return to 2.0% in fiscal 2027. Companies remain optimistic about salary increases in the spring of 2026, consolidating domestic demand momentum.

The long-term weakening of the yen has pushed up import costs, and raising interest rates has become a necessary means to alleviate imported inflation.

On the other hand, although GDP will shrink at an annualized rate of 1.8% in the third quarter of 2025, the BOJ emphasizes that this is a temporary phenomenon: fiscal stimulus of 21.3 trillion yen and investment in AI equipment are expected to drive a rebound in the fourth quarter. Looking to the future, the official statement stated:

If the economy and price trends are consistent with forecasts, interest rates will continue to be raised.

According to documents released by the BOJ, as the inflation rate is still higher than the nominal interest rate, Japan’s real interest rate is still negative, and the monetary environment is still loose.

Follow-up policies and market observation

BOJ stated that it will maintain a "step-by-step, data-dependent" model. The market generally predicts that interest rates may be raised again in April or June 2026, and will push interest rates to 1% in mid-2026. The long-term end interest rate is estimated by BNP Paribas to be around 1.5%.

Analysts remind that wage negotiations and retail sales data in the first half of 2026 will be the key to observing the pace of interest rate increases. For investors, the interaction between the trend of the yen, Japanese bond yields and global capital reallocation will determine asset performance next year.

Bitcoin surged to $87,000

In terms of the cryptocurrency market, it may be a bad news, as Bitcoin surged to $87,500. The trend in the past few days can be said to be constantly moving up and down, with sharp short-term fluctuations.