Political pressure is mounting on the government to take action to protect Japanese households from the inflation surge. The BoJ’s actions and USD/JPY threatening to break above 150 will not help form an impression that the government is doing all it can to fight inflation. This is an impossible task given the BoJ’s stance is targeted more toward eliminating the risk of deflation.

The political damage from inflation could certainly change the political incentives to intervene in the FX market as well given the focus on Yen weakness being a key factor in driving inflation. That could prove difficult right now given the stability in the USD/JPY market but the poor showing in these elections will certainly encourage intervention at the earliest feasible moment.