The Bank of Japan (BOJ) increased its policy interest rate to 0.75% during its December 19 meeting, marking the highest level since 1995. This 25-basis-point hike, anticipated by market analysts, is the second rate increase this year. BOJ Governor Kazuo Ueda emphasized the importance of monitoring inflation and wage trends before considering further monetary tightening. Following the rate hike, Japan's Nikkei 225 index rose by 1.5%, and Bitcoin surged past $87,000, indicating the sensitivity of liquidity and cryptocurrency markets to interest rate changes. Analysts predict another potential rate increase by mid-2026, with the unwinding of yen carry trades potentially impacting global financial assets. The BOJ's decision is part of broader efforts to counter the financing of terrorism.