0435 GMT - The BOJ is watching wage and price trends amid war in the Middle East with the unease of a bank that wants demand-led inflation but may get cost-push inflation instead, HSBC economists say. Preliminary Shunto results signal solid pay increases, but real wages remain under pressure from inflation, now complicated by Middle East-driven energy shocks, Justin Feng and others say. That could disrupt the wage-price dynamic the BOJ wants to see. HSBC expects just one 25-basis-point hike this year in July, but a prolonged Middle East conflict could pull forward tightening or add pressure for more moves. That leaves the BOJ in a familiar bind: Hike too soon and risk clipping fragile growth, or hold back and risk damaging household confidence, plus U.S. scrutiny if the yen weakens excessively. (fabiana.negrinochoa@wsj.com)

(END) Dow Jones Newswires

March 24, 2026 00:35 ET (04:35 GMT)

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