Bank of Japan raises interest rates by 25 basis points. Bitcoin rises against yen

The Bank of Japan (BOJ) announced a 25 basis point rate increase on Friday, lifting its benchmark interest rate to 1.25%, the highest level recorded in 31 years. This move represents the Japanese central bank's second policy rate hike within three months as policymakers attempt to combat persistent domestic inflation and mitigate ongoing currency weakness. The decision also follows calls from U.S. Treasury Secretary Scott Bessent urging Tokyo to tighten policy to support the yen. Despite the rate increase, the Japanese yen weakened in foreign exchange markets, lifting the USD/JPY currency pair from 156.20 to 156.70. In the digital asset sector, Bitcoin posted modest gains when priced against the Japanese currency, with the BTC/JPY pair on Tokyo-based bitFlyer rising 0.5% to JPY 12.06 million. Meanwhile, Bitcoin denominated in U.S. dollars remained relatively stable around $76,900. Global investors remain watchful of BOJ tightening due to the persistent risk of yen carry trade liquidations impacting global financial liquidity.