Deputy governor Himino today downplayed the risks from the US that were the BOJ's focus in 2H24. He mentioned plenty of caveats too, not least being that speeches shouldn't be read as telegraphing any MPC outcome. But it feels like the BOJ is getting closer to hiking again.

Today's labour market indicators – official wage data for November, and the Q1 regional report from the BOJ – don't suggest that momentum is picking up sharply. But they do indicate that the labour market is tight, and wage growth continuing to trend up.

After a couple of weeks travelling there, and recent data and policy releases, it is clear that Japan's cycle and inflation stories are intact. That makes a Q1 BOJ hike likely, but on its own, that won't mean much for $JPY. More interesting is to ask what might get the bank to move more quickly.

There was a dissenting proposal to hike today, and while the majority voted to stay on hold, Ueda suggested more clarity on wages would clear the way for rates to go up. That makes the early January meeting of BOJ regional managers important, though for the JPY, that's quite a while to wait.

The BOJ releases its quarterly Tankan survey in two parts. The summary was published Friday, and today's full release confirms the story: the forecast scores point to a labour market that is still tightening, and output price pressure that is continuing to build.

The Q4 Tankan shows business sentiment firm, the labour market still very tight, and pricing intentions rising. A few months ago, this sort of picture would have made it easy to think of an imminent rate hike. However, the faltering of the BOJ's message since make it hard now to have conviction.

Today's data releases were constructive: the December Reuters non-mfg Tankan recovered from recent weakness with the outlook looking strong; the Q4 business sentiment survey from the MOF was solid, with the labour market tight; and PPI inflation rose again to the highest in more than a year.

The dip in consumption that began in August is continuing. By contrast, wage growth isn't slowing, and while for full-time workers has only just caught up with inflation, for part-time workers it is comfortably ahead. This should be setting up better consumption, and so aggregate demand, in 2025.

Profits ticked down in Q3, but that was after a strong Q3, and there's no change in the uptrend in earnings, margins or capex. In this context of continued strong profitability, the mild rise in the labour share is also constructive. However, trends in smaller firms are much weaker.