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fxJun 26, 2026, 6:34 AM

BoJ Rate Hike Path Supported as Tokyo Inflation Nears 2% Target

Commerzbank notes that Greater Tokyo inflation has edged up to just below 2%, reinforcing the case for further Bank of Japan normalization. Limited oil passthrough and structural improvements support the yen.

USDJPYJPY

Volkmar Baur of Commerzbank reports that inflation in Greater Tokyo has edged higher and is now just below the 2% target. This reading strengthens the backdrop for the Japanese Yen as the Bank of Japan (BoJ) continues to normalize policy.

The analyst points to limited second-round effects from oil prices and signs of structural normalization in the economy. These factors give the BoJ room to proceed with further rate hikes without disrupting recovery.

A hawkish BoJ stance typically supports the yen, making JPY-sensitive pairs like USD/JPY vulnerable to downside moves.

Source: FXStreet Forex News