The policy path by the BOJ right now is rather clear. They kicked the can down the road to next year's spring wage negotiations, in hopes that the stronger wages outcome there will provide them with a springboard to begin scaling back on ultra easy policy. But as inflation starts to show signs of moderating, would the BOJ be leaving it too late to set in motion the normalisation process?

The latest Tokyo inflation report here is suggestive that perhaps price pressures are starting to moderate and that clouds the outlook for the BOJ, especially if inflation may turn lower heading into next year - as per what we're seeing now in other countries.

For now, both the headline and core reading is still keeping above the 2% mark but if they are slowing down, how will Ueda & co. position themselves to argue that such a trend can be identified as "sustainable" when it previously was not when moving higher?

At the end of the day, it's not about what makes sense anyway. It's all about what central banks want to believe and as market players, we all just have to listen. That's the unfortunate reality of trading these days. Integrity has long left the chat, even well before the Covid pandemic.

If the BOJ is adamant that all the conditions still warrant a change in policy stance next year, they are well within their means to call it so. But as inflation pressures begin to ease and perhaps may ease further in the months ahead, it will cast some doubts over the response by the central bank and the timing of it all - especially since when they could have done so already this year.