Bank of Japan: three members call for rate hike; yen rises, bitcoin falls

The Bank of Japan (BoJ) left its guideline for money market operations unchanged, encouraging the uncollateralized overnight call rate to remain around 0.75%, but the Policy Board decision was carried by a 6-3 vote.

Three Policy Board members—Nakagawa Junko, Takata Hajime and Tamura Naoki—voted against the majority, proposing that the Bank set the guideline closer to 1.0%; their proposals were defeated by the majority vote. The official statement records their reasoning, citing upside risks to prices under accommodative financial conditions.

In the Bank’s April outlook, projections for fiscal 2026 were revised: core consumer prices (CPI excluding fresh food) were raised to around 2.8% while real GDP growth was revised down to roughly 0.5%—changes the BoJ attributed in part to higher crude oil prices linked to geopolitical tensions. Those revisions strengthen the case for further normalization of policy.

Markets reacted immediately. The yen strengthened as traders priced a higher probability of a June rate increase, and risk-sensitive assets, including bitcoin, came under pressure in short-term trading. The split vote has lifted market-implied odds of a 25bp move at the June meeting, reviving concerns about carry-trade unwinds and broader volatility in risk markets.

Strategists say the BoJ’s internal divergence makes the path of future tightening more data- and events-dependent: with the next Policy Board meeting scheduled for June 15–16, market participants will focus on incoming inflation prints, wage developments and global energy price dynamics. A near-term hike would compress yield differentials, challenge yen-funded carry positions and likely ripple through equities and crypto markets, while a more gradual pace would leave room for further adjustment in financial conditions.