BoJ Deputy Governor Himino said the bank\u2019s policy is still somewhat accommodative, but should move gradually towards a more neutral stance through moderate policy rate rises. He said the aim is price stability by avoiding both excessive inflation and deflation, to support sustainable growth.<\/p>\n
He said the economy appears neither overheating nor stagnating, based on current estimates. He also said the impact of past rate rises on the economy has been limited.<\/p>\n
He said market moves need close monitoring, but policy should not be overly driven by them. He said responding to inflation caused by supply shocks can disrupt GDP, and policy may take effect after shocks have already faded.<\/p>\n
He said it is better to confirm underlying inflation when dealing with temporary supply shocks. He added the inflation gap is slightly negative now, but is expected to move towards zero.<\/p>\n
In markets, USD\/JPY was up 0.05% at 156.25. The BoJ targets inflation of around 2%, adopted QQE in 2013, added negative rates and 10-year yield control in 2016, and lifted interest rates in March 2024.<\/p>\n
The Bank of Japan is signaling a clear path toward slowly raising interest rates from its current accommodative stance. We should not interpret this as a plan for aggressive action, but rather a “dovish hiking” cycle. The key takeaway for us is the emphasis on “gradual” and “moderate” moves.<\/p>\n
This cautious approach is supported by the latest economic data. February 2026 core inflation came in at 1.9%, just shy of the 2% target, which removes any pressure for a sudden, sharp rate increase. This confirms the view that underlying inflation is stabilizing but not running hot.<\/p>\n
Furthermore, the initial results from the 2026 “shunto” spring wage negotiations are showing average pay increases around 3.5%, solid but below the highs seen in 2025. When we look back at the final GDP figures for late 2025, which showed modest growth, it reinforces the message that the economy is not overheating. This gives the central bank cover to proceed slowly.<\/p>\n
With USD\/JPY currently trading around 156.25, the central bank’s language suggests it will not be panicked by market moves or chase the currency with surprise hikes. We are being told explicitly that they fear being attacked by speculators if they react too strongly to market whims. This predictability suggests a cap on how strong the yen can get in the short term.<\/p>\n
For our options strategies, this telegraphing of a slow process suggests implied volatility in yen currency pairs may be too high. We should consider positioning for a period of range-bound trading rather than a sharp breakout in the yen’s favor. Selling USD\/JPY volatility could be a viable strategy, as the central bank’s path seems clearly laid out for the coming months.<\/p>\n
In the rates market, this means we should anticipate a steady but gentle steepening of the Japanese government bond yield curve. The path toward a neutral policy rate will be a long one, so we should not price in a series of rapid hikes. This makes positioning for a slow and predictable rise in short-term rates the most prudent course of action.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Himino says BoJ remains accommodative, will shift toward neutral with gradual hikes, watching inflation, markets closely.<\/p>\n","protected":false},"author":103,"featured_media":17049,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50486","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50486"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50486\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17049"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}