Makoto Sakurai, a former executive of the Bank of Japan (BoJ), has stated that another interest rate hike is unlikely this year, following Japan’s recent increase, which coincided with a drop in Bitcoin’s value. On Monday, Bitcoin fell below the $59,000 mark, trading at $58,388.
In an interview with The Japan Times, Sakurai remarked, “They won’t be able to hike again, at least for the rest of the year. It’s a toss-up whether they can do one hike by next March.” His comments reflect a cautious approach to Japan’s monetary policy after the recent rate increase, which was initially intended to curb inflation and stabilize the economy.
BoJ Deputy Governor Shinichi Uchida also confirmed on August 7 that Japan would maintain its low-interest rates due to the weak yen and ongoing global financial instability. This stance contrasts with the initial decision to raise rates, which aimed to address inflationary pressures and support the yen.
The BoJ’s recent rate hike on July 31, raising the policy rate to 0.25% from a range of 0 to 0.1%, triggered market turmoil both domestically and globally. Domestically, the rate hike signaled a shift in monetary policy that could slow economic growth by increasing borrowing costs for businesses and consumers. Globally, it contributed to financial market volatility, as investors adjusted their portfolios in response, leading to fluctuations in currency and asset prices.
Despite the market’s initial reaction to the rate hike, recent dovish comments from the BoJ have provided some optimism. Analysts at Greeks.live noted that the market has gained confidence, with sentiment improving despite the continuous flow of negative news. They also pointed out that the likelihood of a rate cut by the U.S. Federal Reserve in September has further bolstered market confidence.
In the broader context, Japan’s low-interest rates have made Bitcoin and other high-return investments more appealing. The low-rate environment allows investors to borrow money cheaply and invest in assets like Bitcoin, a strategy known as the “carry trade.”
However, the crypto market continues to face pressure from regulatory challenges and heightened volatility, exacerbated by tightening monetary policies from other major central banks, such as the U.S. Federal Reserve. As the global economic landscape remains uncertain, all eyes are on the upcoming Federal Reserve meeting in September, where analysts expect rates to remain steady. Federal Reserve Chair Jerome Powell has hinted at the possibility of rate cuts, which could further influence market dynamics.
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