Japan’s inflation cools and the BOJ keeps rates on hold, leaving Bitcoin and the yen largely unchanged.

Bitcoin (BTC $88,754.76) and the Japanese yen, which have recently moved in tandem, traded steady on Friday after Japan reported easing inflation and the Bank of Japan (BOJ) held interest rates unchanged.

Japan’s headline consumer price index (CPI) rose 2.1% year-on-year in December, down from November’s 2.9%, while core inflation, excluding fresh food, slowed to 2.4% from 3%, according to the Ministry of Internal Affairs and Communications. Core-core inflation, which strips out both food and energy, remained firm at 2.9%, reflecting persistent underlying price pressures. Analysts at ING noted that while slowing headline inflation may encourage a cautious approach, persistent core-core inflation could support further policy normalization.

The BOJ kept its benchmark rate at 0.75% in a near-unanimous vote, while raising growth and inflation forecasts for fiscal 2025 and 2026, citing continued expansionary fiscal support.

Bitcoin hovered near $90,000, while the yen slipped slightly to 158.70 per U.S. dollar. Analysts warned that the yen’s weakness could be bearish for Bitcoin, given the 90-day correlation between the two is 0.84.

The 10-year Japanese government bond yield rose 3 basis points to 1.12%, reflecting ongoing fiscal concerns and expectations of future BOJ tightening. Earlier in the week, surging yields pushed global borrowing costs higher, weighing on equities and Bitcoin, which briefly fell below $88,000 before stabilizing near $90,000, CoinDesk data show.