The Bank of Japan (BOJ) has made the decision to maintain its interest rates unchanged, keeping the short-term rate at 0.25%. This decision comes after the BOJ held rates steady for the third consecutive time, following similar choices in September and October. The announcement led to a drop in the Japanese yen to 155 against the dollar, indicating a shift towards alternative assets like Bitcoin among investors.
BOJ Interest Rate Unchanged
On December 19th, the Bank of Japan (BOJ) announced its decision to keep interest rates unchanged at 0.25%. This marks the third consecutive time the BOJ has opted to maintain the short-term policy rate, with a vote of 8-1 in favor of the decision.
While most of the BOJ board members supported the decision to hold rates steady, Naoki Tamura, a policy hawk, advocated for a 0.5% rate hike citing concerns over rising inflation. However, his proposal was not accepted.
The decision to keep interest rates unchanged reflects the BOJ’s cautious approach in light of uncertainties surrounding the economic plans of U.S. President-elect Donald Trump. Following the announcement, the Japanese yen dropped to a one-month low of 155.28 against the dollar before experiencing a slight recovery.
Governor Kazuo Ueda shared insights into the BOJ’s decision, highlighting that real interest rates remain low. He mentioned that if the economy and prices align with the bank’s forecast, there may be potential rate hikes in the future. Ueda emphasized the importance of closely analyzing economic data before making any adjustments to monetary support, particularly in regards to wage outlook and upcoming negotiations.
Cryptocurrency To Thrive Soon
With the BOJ maintaining interest rates at a steady level, investors may turn to alternative assets such as cryptocurrency. Low interest rates diminish the appeal of traditional savings and bonds, prompting individuals to explore options like Bitcoin.
Bitcoin, currently trading at an all-time high of $108,000 with a market cap of $2.2 trillion, is anticipated to continue its upward trajectory and could serve as a robust hedge against inflation. As investors seek avenues for potential growth and diversification, cryptocurrency may witness increased interest and adoption in the near future.