A Bank of Japan official recently signaled that if the neutral rate rises due to fiscal expansion and economic growth initiatives, a rate hike would logically follow. Here's what that means:

The key insight—when neutral rates move higher, the central bank often has room to lift actual rates without tightening financial conditions excessively. Think of it as maintaining the policy stance while the economic backdrop changes.

What's driving this? Japan's fiscal stimulus and structural growth strategies are reshaping the economic landscape. If these efforts successfully elevate the neutral rate, it removes a major constraint on policy normalization.

Why should traders care? Central bank decisions ripple across markets. When major institutions like BOJ recalibrate their approach to interest rates, it affects currency movements, bond yields, and ultimately capital flows into and out of risk assets—including crypto. A clearer path to rate adjustments reduces policy uncertainty.

Bottom line: Watch for confirmation signals on whether Japan's growth initiatives are actually moving the needle on the neutral rate. That's the real trigger for what comes next.