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Bank of Japan reportedly raises rates to 1.25%, highest since 1995

Barchart reports rates reached their highest level since 1995. A user quoting it says the yen fell despite the hike and argues that Japan’s debt burden constrains further increases.

Alex Mason 👁△AM
Crypto RoverCR
2 Sources, 22d ago, first seen 22d ago

TLDR

Barchart reported on September 18, 2026, that the Bank of Japan had raised rates to their highest level since 1995. A user quoting that report put the rate at 1.25% and said the yen weakened despite the increase. The user argued that higher government borrowing costs limit further hikes, while the gap with U.S. rates keeps the yen carry trade—borrowing yen cheaply to buy higher-yielding assets abroad—alive.

Combined views

190.2K

2 Sources, first seen 22d ago

822 likes78 comments134 saves97 reposts

Combined views

190.2K

2 Sources, first seen 22d ago

822 likes78 comments134 saves97 reposts

Sentiment

Positive——Negative

Summary

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No sentiment analysis available yet.

Sentiment

Positive——Negative

Summary

Not enough discussion yet.

No sentiment analysis available yet.

2 Sources

Alex Mason 👁△@AlexMasonCrypto🚨 JAPAN JUST DID THE IMPOSSIBLE The Bank of Japan just raised rates to 1.25%. The highest since 1995. And the yen FELL. Now ask yourself one question: WHY CAN’T JAPAN JUST KEEP HIKING UNTIL THE YEN RECOVERS? For years, the BOJ kept rates near zero or NEGATIVE to fight deflation. Japan built its entire financial system around almost FREE MONEY. Japanese investors could borrow yen cheaply and buy higher-yielding assets overseas. That became the famous YEN CARRY TRADE. But there was a cost: 1) Negative rates crushed bank margins. 2) Massive BOJ bond buying distorted the government bond market. And years of cheap money left Japan extremely sensitive to higher rates. And this is where the trap appears. Japan’s government debt pile is enormous. As rates rise, old cheap debt eventually gets refinanced at higher rates. Japan’s government interest bill has already gone from roughly: ¥8.5T in 2023 → ¥13T in 2026 And that is BEFORE Japan gets anywhere close to U.S. rates. Today: - Japan: 1.25% - U.S.: 3.75%-4.00% The carry trade is still alive. Dollars still pay far more than yen. To really close that gap, Japan would have to tighten MUCH harder. But aggressive hikes would hit: → Government borrowing costs → Corporate borrowing → Mortgages → Bond prices → Economic growth That is why Japan cannot simply keep smashing rates higher. And that is why today’s hike wasn’t enough to save the yen. The market understood something retail didn’t: 1.25% IS STILL CHEAP MONEY. The rate gap is still huge. And the BOJ gave no signal that it is prepared to close that gap aggressively. So Japan faces an ugly choice: Raise rates fast and put enormous pressure on the system built around cheap money. Or normalize slowly and tolerate a weaker yen for longer. Right now, the market is betting on the second option. And a weak yen has its own cost. Japan imports huge amounts of energy and raw materials. A weaker currency makes those imports more expensive and pushes inflation higher. But it also helps exporters and increases the yen value of overseas profits. Japan doesn’t necessarily WANT a weak yen. It is tolerating one because aggressively defending it could be even more painful. Remember, I’ve been trading markets for over 15 years. The biggest opportunities come when central banks get trapped between two bad choices. That’s exactly what I’m watching now. When I see where the money moves next, I’ll post it here publicly like I always do. Turn notifications on. If you’re not following yet, you’ll understand why that was a mistake later.22d
Crypto Rover@cryptoroverYEN CARRY TRADE UNWIND JUST GOT DELAYED! Today, BOJ raised interest rates by 25 BPS and even called for more rate hikes. Still, USD/JPY pumped and hit the 158 level for the first time in two weeks. Typically, after a BOJ rate hike, USD/JPY falls, but this time it's the other way around. And the reason is the Fed, which has also started its rate hike cycle. When the Fed hikes rates, DXY gets strong, and the rate gap between the US and Japan goes up. This results in yen devaluation, which keeps the yen carry trade alive and results in more liquidity for the global markets.22d
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    Bank of Japan

    2 Sources

    Alex Mason 👁△@AlexMasonCrypto🚨 JAPAN JUST DID THE IMPOSSIBLE The Bank of Japan just raised rates to 1.25%. The highest since 1995. And the yen FELL. Now ask yourself one question: WHY CAN’T JAPAN JUST KEEP HIKING UNTIL THE YEN RECOVERS? For years, the BOJ kept rates near zero or NEGATIVE to fight deflation. Japan built its entire financial system around almost FREE MONEY. Japanese investors could borrow yen cheaply and buy higher-yielding assets overseas. That became the famous YEN CARRY TRADE. But there was a cost: 1) Negative rates crushed bank margins. 2) Massive BOJ bond buying distorted the government bond market. And years of cheap money left Japan extremely sensitive to higher rates. And this is where the trap appears. Japan’s government debt pile is enormous. As rates rise, old cheap debt eventually gets refinanced at higher rates. Japan’s government interest bill has already gone from roughly: ¥8.5T in 2023 → ¥13T in 2026 And that is BEFORE Japan gets anywhere close to U.S. rates. Today: - Japan: 1.25% - U.S.: 3.75%-4.00% The carry trade is still alive. Dollars still pay far more than yen. To really close that gap, Japan would have to tighten MUCH harder. But aggressive hikes would hit: → Government borrowing costs → Corporate borrowing → Mortgages → Bond prices → Economic growth That is why Japan cannot simply keep smashing rates higher. And that is why today’s hike wasn’t enough to save the yen. The market understood something retail didn’t: 1.25% IS STILL CHEAP MONEY. The rate gap is still huge. And the BOJ gave no signal that it is prepared to close that gap aggressively. So Japan faces an ugly choice: Raise rates fast and put enormous pressure on the system built around cheap money. Or normalize slowly and tolerate a weaker yen for longer. Right now, the market is betting on the second option. And a weak yen has its own cost. Japan imports huge amounts of energy and raw materials. A weaker currency makes those imports more expensive and pushes inflation higher. But it also helps exporters and increases the yen value of overseas profits. Japan doesn’t necessarily WANT a weak yen. It is tolerating one because aggressively defending it could be even more painful. Remember, I’ve been trading markets for over 15 years. The biggest opportunities come when central banks get trapped between two bad choices. That’s exactly what I’m watching now. When I see where the money moves next, I’ll post it here publicly like I always do. Turn notifications on. If you’re not following yet, you’ll understand why that was a mistake later.22d
    Crypto Rover@cryptoroverYEN CARRY TRADE UNWIND JUST GOT DELAYED! Today, BOJ raised interest rates by 25 BPS and even called for more rate hikes. Still, USD/JPY pumped and hit the 158 level for the first time in two weeks. Typically, after a BOJ rate hike, USD/JPY falls, but this time it's the other way around. And the reason is the Fed, which has also started its rate hike cycle. When the Fed hikes rates, DXY gets strong, and the rate gap between the US and Japan goes up. This results in yen devaluation, which keeps the yen carry trade alive and results in more liquidity for the global markets.22d
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