FX.co ★ Japan 10-Year Yield Eases on BOJ Uncertainty

Japan’s 10-year government bond yield slipped to around 2.13% on Friday, snapping a three-day advance amid continued uncertainty over Bank of Japan policy. Earlier in the week, the government appointed two reflationist academics to the BOJ’s policy board, while Prime Minister Sanae Takaichi reportedly voiced concerns about further interest rate hikes in a meeting with Governor Kazuo Ueda last week.

At the same time, hawkish board member Hajime Takata renewed his call for additional rate increases and for clearer guidance that the BOJ’s price stability target is close to being achieved. Governor Ueda also reportedly said the central bank would carefully assess incoming economic data at its March and April meetings before deciding on policy, keeping the door open to a near-term hike.

On the data front, Tokyo’s inflation slowed to its weakest pace in more than a year, as government utility subsidies helped contain household energy costs. The softer inflation figures reinforced expectations that the BOJ may postpone any immediate rate increases.