Bank of Japan Lifts Rates to 1%, Highest in Three Decades

The Bank of Japan raised its short-term policy rate by 25 basis points to 1% on June 16, 2026. This marks the highest level since September 1995. The decision passed with a 7-1 vote.

Two forces drove the early action: persistent yen weakness and rising energy prices linked to Middle East tensions. Imported goods keep getting more expensive, and a depreciating currency amplifies that problem. The move continues a gradual tightening path that started with a hike to 0.75% in December 2025.

Officials signaled further adjustments remain on the table, pointing to a neutral rate of around 2% as a longer-term reference point. The path depends on evolving inflation dynamics and energy market pressures.

The central bank also paused further reductions in its bond purchasing program. This injected a dovish signal alongside the hawkish rate move. As a result, Bitcoin diverged from its historical pattern of declines following BOJ hikes, climbing approximately 1.5% to above $66,500.