Let’s get this out of the way first and foremost. The rate hike today was very well anticipated and priced in by markets already. As such, there isn’t all too much reaction with the Japanese yen even falling after the fact even as interest rates are at the highest since 1995.

Markets don’t react to just the event itself. Markets tend to react to surprises instead. And this time around, the BOJ decision was rather straightforward after how the narrative has shifted in recent weeks.

BOJ governor Ueda took a bolder stance to defy Japan prime minister Takaichi’s wishes in wanting the central bank to play ball alongside the government’s ambitious fiscal stance. And that led to a bit of a square off in recent weeks with lawmakers continuing to want the central bank to take a more patient approach.

But with the window to hike rates perhaps closing, this was a better late than never move on the part of the BOJ. It would have been “cleaner” had they acted in October but at the time, one could feel that they might be more comfortable with waiting on the spring wage negotiations next year.

So, that puts us to where we are now.

I mean, they still could’ve waited for confirmation from the outcome of the spring wage negotiations next year. However, the optics would look even poorer than what it is now as that would be a real blow to the government’s fiscal plans.

Where does all this leave us though?

Even with the rate hike today, it doesn’t mean that the BOJ will have it easy to push for another rate hike. Don’t get me wrong. If wages data stays hot, they will have reason to stay on this path.

However, don’t expect Takaichi and her lackeys to make it easy for Ueda & co. in the coming months.

As such, the threshold for the next rate hike will be even higher than what it was to have taken the bold step to hike rates today. And that says a lot.

So, any further pricing on that and stronger tailwind for the Japanese yen will depend on the BOJ’s conviction.

The first test of that will be BOJ governor Ueda’s press conference later. Let’s see if he will say anything about keeping their options open for March. I suspect that he would but he surely won’t be overly explicit and pushy on the matter.