USD/JPY: BoJ seen with room to speed up hikes as Japan inflation builds
The source reports no yen price move, pip figure or technical levels. Japan is seeing a surge in underlying inflation, driven by escalating producer prices and wage growth. Government subsidies are currently easing the consumer burden from rising energy costs. Even so, inflation expectations continue to climb, which the report says points to a potential wage-price spiral. Against this backdrop, analysts see room for the Bank of Japan to accelerate its tightening. They forecast a 25 basis point rate increase in 2026, with more hikes anticipated in 2027 that could take the policy rate to 1.75%. For yen traders, rising inflation expectations and wage growth support a firmer BoJ policy path over time. That outlook would be a potential tailwind for the yen against the US dollar. Upcoming Japanese price and wage data will be the key signals for whether the pace of hikes quickens.
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