Three Bank of Japan members call for a rate hike; yen rises while bitcoin falls

Three members of the Bank of Japan (BoJ) dissented from the central bank's decision to keep interest rates unchanged at 0.75%, advocating for an immediate hike. This split vote, the largest since Kazuo Ueda became governor, signals a growing hawkish sentiment among policymakers. The BoJ also raised its core inflation forecast to 2.8% for the fiscal year while lowering economic growth projections. These shifts are partly attributed to war-related disruptions impacting global energy prices. Following the decision, markets are now pricing in a 74% chance of a rate hike in June. The Japanese yen strengthened significantly against the dollar, while bitcoin prices fell. This yen strength is often linked to a potential unwinding of carry trades, where investors borrow in low-interest yen to invest in higher-yielding assets abroad. Historically, yen strength has been associated with risk aversion and has previously impacted global risk assets. However, recent data suggests Japanese institutions continue to increase their holdings of U.S. Treasury notes, indicating that yen-funded carry trades may still be active.

(Source：CoinDesk)