FX.co ★ Japan 10Y Yield Extends Rally on BOJ Hike Bets

Japan’s 10-year government bond yield climbed to around 2.59% on Wednesday, its highest level since 1997, as markets increasingly priced in an imminent interest rate hike by the Bank of Japan. The central bank’s Summary of Opinions from its April meeting signaled that policymakers were open to raising rates as early as the next meeting, with surging oil prices intensifying inflation risks. Members observed that the economy is recovering at a moderate pace but remains vulnerable to higher energy costs, while underlying inflation was judged to be gradually converging toward the 2% target. The OECD also projected that the BOJ’s policy rate could reach 2% by the end of 2027. At the same time, oil prices remained elevated as diplomatic efforts to resolve the US-Iran war continued to stall, keeping inflationary pressures firmly in focus.