TOKYO, June 12 (Reuters) - Japanese government bond yields declined on Wednesday, tracking a drop in Treasury yields ahead of key U.S. inflation data and the Federal Reserve's policy decision later in the day.

The slide was limited, however, by a looming Bank of Japan (BOJ) policy announcement on Friday, with traders and analysts bracing for a hawkish tilt from the local monetary authority.

The 10-year JGB yield fell 2.5 basis points (bps) to 0.995%, dipping back below the psychological 1% mark for the first time this week.

Bond markets globally have been volatile in recent weeks as U.S. macro data swung from unexpected strength to surprising softness and back again, forcing several about-faces on the odds of Fed rate cuts this year.

At the same time, consensus has been building for the BOJ to either pare back its monthly bond purchases at this meeting or signal an intention to do so soon, following several media reports hinting at such an outcome.

BOJ officials have turned more hawkish since early May as the yen's plunge to a 34-year low to 160.245 per dollar threatened hopes for a virtuous cycle of mild inflation and steady wage gains.

The currency remains close to that level, last trading at 157.23.

"The BOJ will be thinking they need to do or say something at this meeting, considering the persistent downward pressure on the yen," said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management.

"I'm not sure whether they would actually reduce purchases or signal more flexibility of long-term yields at this meeting," he added. "It's such a close call."

Either way, the trend for JGBs should be a steepening of the yield curve, led by a rise in super-long yields, Kichikawa said.

Japan's 10-year yield touched a 13-year peak of 1.1% by May-end, but that level "is not the end point" over a multi-month horizon, Kichikawa said.

The two-year JGB yield fell 2 bps to 0.345% on Wednesday, while the five-year yield lost 2 bps to 0.570%.

The 20-year yield eased 1.5 bps to 1.810%. The 30-year yield sank 2 bps to 2.155%. (Reporting by Kevin Buckland; Editing by Sonia Cheema)