The Bank of Japan has raised its policy interest rate by 25 basis points as scheduled. According to the official statement, the central bank has sent a rather restrained signal — although real interest rates remain at an extremely low level, they explicitly stated that they will continue to gradually raise rates in the future based on improvements in economic and price data.

In other words, the story of rate hikes is not over; the pace simply won't be very rapid. It will neither shift to aggressive tightening nor stagnate but will proceed steadily. This gradual approach appears quite moderate on the surface, but the actual implementation will depend on the speech by the central bank governor this afternoon.

Overall, this rate hike process was quite smooth, and the market did not experience the large fluctuations expected. A key judgment beforehand was that this rate hike would have limited impact on the market; the real focus should be on the movement of the USD/JPY exchange rate. If the USD/JPY does not continue to decline significantly, it indicates that the scale of carry trade unwinding is not large. According to CFTC's daily yen position data, this judgment is also largely confirmed — the impact is relatively controllable and not as severe as imagined.