The Bank of Japan just raised interest rates to their highest level since 1995. And it’s not done yet.

The BOJ hiked its short-term policy rate to 1% during its June 15-16 meeting, a move driven by persistent inflation risks that have been building across the Japanese economy. Now, a summary of opinions from that meeting, released June 24, reveals that some policymakers are pushing for even faster rate increases, with a potential hike to 1.25% before the end of 2026.

The inflation picture is more complicated than it looks

Tokyo’s core consumer price index rose 1.3% year-over-year in May 2026. That’s actually down from 1.5% in April, and it marks the fourth consecutive month that the reading has come in below the BOJ’s 2% target.

But wholesale prices tell a very different story. Japan’s wholesale inflation surged to 6.3% in May, hitting a three-year high. The primary culprit is energy costs, which have been climbing amid the ongoing conflict between the US and Iran. Those upstream price pressures haven’t fully filtered into consumer prices yet, but the gap between wholesale and retail inflation is the kind of thing that keeps central bankers up at night.

Why the BOJ is moving aggressively

BOJ policymakers are explicitly discussing the risk that underlying inflation could exceed the 2% target. Some members at the June meeting argued for more aggressive action. The logic is straightforward: if wholesale prices are running at 6.3% and energy costs show no signs of easing, waiting too long to tighten could mean playing catch-up later.

What this means for crypto and risk assets

Bitcoin’s immediate reaction to the June rate hike was actually positive. The price moved from roughly $65,600 to around $66,000 after the decision. But zooming out provides a more sobering picture: historically, Bitcoin has declined an average of 5.74% in the 30 days following previous BOJ rate hikes.