Market pricing for a Bank of Japan rate hike in September has climbed to ~80 percent, up sharply from around 65 percent in early August, after media reports pointed to government support for an early tightening move. Attention is shifting toward the pace of subsequent hikes rather than whether the BoJ moves at all in September, a dynamic that could stoke concern about a faster than expected tightening path. Should the Takaichi administration signal it now backs earlier action, that would help ease worries the BoJ has fallen behind the curve, offering some stabilisation for long and super long dated JGB yields. An October move remains possible but would be read as the more dovish outcome relative to current pricing. Analysts see the policy rate reaching 1.25 percent in September, with the central bank likely to pick up the pace of tightening as underlying inflation edges closer to its 2 percent target.---Japan's inflation trend keeps building the case for a September BoJ move, with markets now debating how fast tightening goes from there.Summary:Japan's Ministry of Internal Affairs and Communications releases July nationwide CPI, with median forecasts pointing to total CPI at 1.9% y/y, core CPI (ex fresh food) at 1.8% y/y and core-core CPI (ex fresh food and energy) at 1.9% y/yDue at 2350 GMT / 1930 US Eastern time June's readings were revised down slightly under a new base year methodology, with total CPI restated to 1.6% from 1.7%, while core and core-core figures were unrevisedTokyo CPI, seen as a leading indicator, already accelerated in July, with core inflation reaching a six month high of 1.9% and both headline and core-core measures climbing to 2.0%Rising import costs tied to Middle East tensions and a weaker yen are seen driving the broader uptrend, even as falling food prices and government caps on gasoline and utility costs partially offset the pressureMarket pricing for a BoJ rate hike in September has risen to just under 80%, up from around 65% on August 7, after reports the government supports early tighteningAnalysts expect the policy rate to reach 1.25% in September, with some seeing scope for the BoJ to accelerate its tightening pace as underlying inflation nears the 2% targetJapan's Ministry of Internal Affairs and Communications is due to release nationwide consumer price data for July, with economists looking for a further acceleration in the core measure that excludes fresh food, the Bank of Japan's key inflation gauge. The median forecast points to core CPI rising 1.8 percent year on year, up from 1.6 percent in June, while total CPI is seen at 1.9 percent, versus a downwardly revised 1.6 percent for June under a newly adopted base year (more on this below if you are interested). Core-core CPI, which strips out both fresh food and energy, is expected at 1.9 percent, up from 1.7 percent a month earlier.The forecasts align with Tokyo's July inflation data, released on July 31, which is treated as a leading indicator for the nationwide trend. Tokyo's core CPI accelerated to a six month high of 1.9 percent, while both the headline and core-core measures climbed to 2.0 percent. Rising import costs linked to prolonged Middle East tensions and continued yen weakness are seen as the main drivers of the broader uptrend, even as falling food prices and government measures capping gasoline and utility costs offset some of the pressure. June's nationwide figures were also affected by fuel subsidies that have been in place since mid March and free high school tuition introduced in April, both of which have weighed on measured inflation.The inflation trend carries direct implications for the Bank of Japan's policy path. Market pricing for a September rate hike has risen to just under 80 percent, up from roughly 65 percent as of August 7, after a series of media reports suggested the government now supports moving early to help sustain the effects of the coordinated Japan-US foreign exchange intervention. Reports have also indicated the central bank is weighing a hike at either its September or October meeting, with an October move likely to be read as the more dovish outcome given current pricing. Analysts expect the policy rate to reach 1.25 percent in September, with some seeing scope for the BoJ to pick up the pace of subsequent tightening as underlying inflation moves closer to its 2 percent target.The market's focus has already begun shifting from whether the BoJ hikes in September to how quickly it follows up, a dynamic that could add to investor unease about a faster tightening cycle. At the same time, growing signs that the Takaichi administration supports earlier action could help stabilise long and super long dated JGB yields by easing concerns that the central bank has fallen behind the curve. ---The next Bank of Japan meeting is mid-September:--------------The government announced on August 7 that it had updated the CPI base year, shifting it to 2025 from 2020. It revises the base year every five years, with the change taking effect from the July figures. The update resulted in a minor 0.1 percentage point downward adjustment to the total CPI for June 2026, while the core CPI, which excludes fresh food, and the core-core CPI, which excludes both fresh food and energy, were not revised.The new 2025-base CPI weights are calculated from average household expenditure in 2025, mainly drawn from the Family Income and Expenditure Survey, with items whose share of household spending has risen or fallen added to or removed from the index accordingly. The Statistics Bureau is releasing the 2025-base index retroactively from January 2025, converting earlier data to the new base for time series purposes, though published rates of change for each base period are left unmodified rather than recalculated. The old 2020-base CPI will continue to be calculated and published in parallel until December 2026, giving markets and the BoJ a transition window to compare the two series before the 2025-base figures become the sole reference point. This article was written by Eamonn Sheridan at investinglive.com.