The BOJ raised rates by 25 basis points in June, signaling that additional tightening remained possible as inflationary pressures persisted. While Japan’s consumer inflation has accelerated in recent months, core inflation remains below the BOJ’s 2% target. ANZ analysts expect inflation to continue rising as the delayed effects of yen weakness and elevated oil prices become more visible. Although the bank forecasts another 25-basis-point rate hike as early as October, it noted that the BOJ could move sooner if the yen continues to depreciate. The USD/JPY pair remains near multi-decade highs after the yen weakened significantly due to the wide interest rate gap between Japan and the United States.