BUZZ-COMMENT-BOJ's hawkish stance to underpin JPY foundations

Feb 14 (Reuters) - The Bank of Japan's hawkish stance is likely to continue supporting the yen. Whether the BOJ elects to raise its policy rate in March remains a point of debate but more rate hikes are definitely in the cards this year.

Inflation is proving sticky in Japan nL1N3P402U, and the BOJ is coming around to the view that prices may not fall back as its current outlook suggests. Governor Kazuo Ueda hinted at this recently in Diet testimony nL1N3P303M, and it may not be long before the BOJ revises its outlook.

The government seems to agree with the BOJ, and has tacitly endorsed the need for recent interest rate hikes nP8N3NI03V, nP8N3NS03O. Many now see the "deflationary mindset" that prevailed since the bursting of the bubble economy in the 1990s as history.

Indeed, an inflationary mindset appears to be taking hold, raising the question of whether the BOJ may be behind the curve in reining in inflation, and the risk that it may have to catch up.

This would be especially the case if wage hikes in April prove to be as high as expected (roughly 5% is eyed) and the economy continues to hum along.

Despite numerous recent speed-bumps including strong U.S. economic and inflation data and concerns over tariffs, USD/JPY looks to be capped ahead of 155.00 (154.80 was the high Wednesday) and remains in a downtrend from the 158.88 Jan 10 high of the year.

Yen crosses also appear biased lower despite recent retracements. EUR/JPY has fallen back after bouncing to 161.16 Thursday from 155.73 on Feb 10 on reports of talks to end the Ukraine-Russia conflict and perhaps a less dovish-than-thought ECB.

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