Bank of Japan may speed up rate hikes, pushing borrowing costs above 2%, ex-BOJ official warns

Markets Bank of Japan may speed up rate hikes, pushing borrowing costs above 2%, ex-BOJ official warns Former BOJ official issues interest-rate warning as yen continues to slide against the dollar. By Omkar Godbole Jul 9, 2026, 6:42 a.m. 2 min read Make preferred on Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Make preferred on Bank of Japan. (Credit: By Wiiii-Wikimedia Commons/Modified by CoinDesk) Summary Show A former Bank of Japan official warns the central bank may raise its benchmark interest rate rapidly this year, potentially to above 2%, as the yen continues to weaken. Faster BOJ tightening could support the yen, potentially weighing over risk assets. BTC and yen have developed a strong positive correlation. The Bank of Japan (BOJ) may raise its benchmark interest rate rapidly this year, as the yen slides, eventually pushing it above 2%. That's the latest warning from a former Bank of Japan official Tsutomu Watanabe, an economics professor at the University of Tokyo who left the central bank in 1999, according to Bloomberg. As of now, the official rate is at 1%, the result of recent hikes, and the 10-year benchmark government bond yield hovers above 2.8%, the highest in at least three decades, according to data source TradingView. Meanwhile, the Japanese yen continues to slide despite recent hikes and hardening Japanese government bond yields. It has depreciated by 60% to 162.36 per U.S. dollar since early 2021, a major decline for one of the most traded currencies in the world. Also, it has dropped 3% so far this year. Faster potential interest rate hikes by the BOJ may put a floor under the yen, or potentially lift it higher. The question then is whether it will help bitcoin BTC $62,890.39 or work against it. One theory floating around in markets since long is that a sustained rally in yen could trigger an unwinding of bullish bets across advanced nation government bonds, tech stocks and even crypto that have been supposedly funded by years of cheap borrowing in yen. In such a case, risk assets, including crypto may fall. But undercutting that theory in recent times is the strong positive correlation between the yen and BTC. Both have been falling against the dollar in lockstep. Further, rapid rate hikes might worsen Japan's already fragile fiscal position, an argument made by several economists. All in all, it's a complex situation. Bitcoin News Japan Related Assets Bitcoin $62,890.39 0.089% Latest Crypto News 1 Live markets: Bitcoin ETFs slip back to outflows while ether funds extend their streak 1 hour ago 2 'CASHCAT' trader turns $800 into over $1 million on Robinhood's brand new blockchain 1 hour ago 3 XRP holds near $1.10 as traders watch long-term breakout setup 2 hours ago 4 Bitcoin, ether steady, gold slides as U.S.-Iran tensions escalate again 3 hours ago 5 Polymarket bets on U.S. marketing blitz to win back trust after 4-year ban: Report 16 hours ago 6 Crypto Long & Short: With MSTR concerns assuaged, look to traditional signals around BTC 16 hours ago 7 Crypto VC Paradigm launches $1.2 billion AI fund as it broadens beyond digital assets 16 hours ago 8 Dinari, tZERO join forces on turnkey platform for tokenized U.S. equities 17 hours ago 9 Adam Back's bitcoin treasury firm scraps SPAC merger, seeks new deal 17 hours ago 10 BNB Chain is building a new layer-1 for high-frequency trading and AI agents 17 hours ago Latest Research SpaceX IPO Drives Tokenized Equity Volumes to Record as Stablecoin Market Cap Falls SpaceX IPO Drives Tokenized Equity Volumes to Record as Stablecoin Market Cap Falls Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B. By CoinDesk Research Jul 7, 2026 Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B. Why it matters: Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B. View Full Report More From Markets Live markets: Bitcoin ETFs slip back to outflows while ether funds extend their streak XRP holds near $1.10 as traders watch long-term breakout setup Bitcoin, ether steady, gold slides as U.S.-Iran tensions escalate again More From Bitcoin Live markets: Bitcoin ETFs slip back to outflows while ether funds extend their streak 'CASHCAT' trader turns $800 into over $1 million on Robinhood's brand new blockchain XRP holds near $1.10 as traders watch long-term breakout setup