Key Facts

• The Bank of Japan raised its key interest rate by 25 basis points to 1%, the highest level since 1995, and signaled it may tighten further if inflation accelerates.
• Despite rate hikes typically weighing on risk assets, bitcoin rose from about $65,600 to $66,000 after the decision, as markets focused on the BOJ’s unexpectedly dovish stance on bond purchases.
• The BOJ’s move to pause its bond taper and fix monthly JGB purchases around 2 trillion yen is seen as an effort to cap long-term yields and support financial markets even as short-term policy tightens.
• Japan now faces rising costs, with wholesale prices climbing more than 6% year-over-year in May, the fastest pace in three years, and headline inflation stood at 1.4% in April, still below the BOJ’s 2% target.
• The Japanese yen weakened from 130 per U.S. dollar to 130.35 U.S. dollar after the Bank of Japan's decision.