Japan’s 10-year government bond yield inched higher toward 2.7% on Tuesday, pulling back from four-month lows amid increasingly hawkish signals from the Bank of Japan. The latest Summary of Opinions showed broad agreement among policymakers that interest rates should continue to rise, as underlying inflation has reached levels broadly consistent with the central bank’s 2% price stability target.
Several members also argued for a quicker pace of monetary tightening to bring rates closer to a neutral level, pointing to businesses’ growing ability to withstand higher borrowing costs. BOJ Chief Economist Seisaku Kameda said on Monday that the central bank is likely to raise interest rates in December and continue tightening monetary policy into next year.
At the same time, inflationary pressures have moderated somewhat, as oil prices extended their decline on growing optimism about a potential peace agreement between the US and Iran.