Recently, I watched the Japanese Central Bank Governor's full speech regarding this rate hike. The core messages can be summarized into four points, which are worth understanding for traders.

First, it’s important to clarify a concept: this rate hike is not a "start of tightening," but rather a slight shift from an extremely accommodative stance to a more normal policy. The Governor repeatedly emphasized that the Bank of Japan has not entered an aggressive rate hike cycle, and it should not be interpreted as a full-scale withdrawal of monetary easing. Such an understanding would be incorrect.

Second, whether there will be further rate hikes depends entirely on data. Unlike some other central banks, the Bank of Japan has no preset schedule for rate increases and will not follow a fixed rhythm. The key factors are whether inflation can stabilize, whether wage growth is sustainable, and how economic data evolve.

The most critical point to observe is whether wages and inflation can form a positive cycle. Short-term price fluctuations are not the main concern; what the central bank truly cares about is whether companies can continue to raise wages and whether inflation can be stabilized at the target level. If wage growth cannot keep up, the Bank of Japan will not rush to tighten policies further.

The final key point is financial market stability. The Governor explicitly mentioned that they will closely monitor Japanese government bond yields, the yen exchange rate, and overall market reactions. The goal is to avoid triggering sharp volatility through a cautious pace of rate hikes. Overall, this appears more like a "tentative adjustment" rather than a "policy shift"—a slow pace, a steady attitude, and leaving room for adjustments.