Japan signals more rate hikes as Bitcoin faces renewed pressure

Bank of Japan governor Kazuo Ueda signalled further rate hikes in 2026, reinforcing expectations that monetary tightening is far from over.

We will keep raising rates in line with improvement in the economy and inflation.

Kazuo Ueda said.

Japan’s benchmark 10-year bond yield climbed to its highest level since 1999 following the remarks.

The yen remained weak near 157 per dollar, close to levels that previously triggered government intervention.

Analysts expect the next BOJ rate increase around mid-2026, with some warning it could come sooner if currency weakness persists.

The BOJ acknowledged Japan’s real interest rate remains deeply negative despite the benchmark rate reaching 0.75%.

Rising yields have strained Japan’s financial system, with regional banks sitting on trillions of yen in unrealised losses.

Germany overtook Japan as the world’s largest creditor nation, highlighting a shift in global capital flows.

Bitcoin has fallen between 20% and 31% after each of the past three BOJ rate hikes as yen carry trades unwound.

Higher Japanese rates reduce the appeal of borrowing yen to invest in risk assets, including cryptocurrencies.

Markets are watching the BOJ’s January 23 policy meeting for clearer signals on the pace of tightening.

At the time of reporting, Bitcoin price was $92,273.05.