Bank of Japan leaves interest rate unchanged: Impact on the macroeconomy and the crypto market

The Bank of Japan (BoJ) decided to keep interest rates unchanged at the last meeting of the year . This means that the interest rate will remain at 0.25%. The central bank bases this decision on uncertainties regarding global economic growth and the sustainability of inflation in Japan. But what does this mean for macroeconomic conditions and the crypto market?

Interest rates in Japan: Impact on macroeconomics and crypto

Interest rates in Japan have a significant impact on macroeconomic conditions and the crypto market, partly due to the so-called carry trade. This mechanism allows investors to borrow cheaply in Japan and invest the capital elsewhere, such as in the US stock and crypto markets.

When the BoJ raised interest rates from 0% to 0.25% this year, funding costs rose, making loans more expensive to maintain and leading to massive selling in stocks and cryptocurrencies. The decision to keep interest rates now has important implications for investors.

Japanese interest rates remain crucial for the crypto market

Investors are closely monitoring interest rate developments in Japan as billions of dollars remain tied up in the carry trade. Another rate hike in Japan could lead to forced selling of stocks and cryptocurrencies, which could send prices down significantly.

Positive short-term outlook for crypto

The BoJ’s decision to keep interest rates stable postpones the reduction in carry trade for now. This gives investors peace of mind and could be a catalyst for a short-term rally in the crypto market. Nevertheless, caution remains.

The Monetary Policy Council was divided on the current decision. Member Naoki Tamura, for example, argued for a rate hike to 0.5% due to inflation risks. This underlines the possibility that a rate hike will still be made in 2025, which could again have an impact on the markets.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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