BoJ is reportedly favouring 25bps hike and a flexible future pace, sources suggest

The substance is twofold: a 25bp step is the bank's habitual increment in its normalisation phase, and the 'flexible pace' framing is the more important element, since it leaves the interval between hikes data-dependent rather than committing to a quarterly or semi-annual cadence. The transmission runs through the front of the JGB curve and through yen-funded carry positioning, where prior tightening episodes have produced sharp but often partial unwinds; the distinction worth drawing is between a hike that is fully pre-briefed, which has historically allowed USD/JPY to fade after an initial dip, and one accompanied by hawkish forward guidance, which is what has sustained yen strength. Governor and board commentary around the decision, and any update on the neutral rate debate, are the follow-ons that determine whether this prices as one-and-done or the start of a sequence. Attention also falls on super-long JGB yields, where fiscal supply concerns have interacted with BoJ tightening in past episodes.