FX.co ★ Japan 10-Year Yield Holds Near 17-Year High

Japan's 10-year government bond yield remained above 1.6% on Friday, close to its highest point since 2008, as investors assessed newly released inflation figures. The Core Consumer Price Index (CPI) recorded a 3.1% year-on-year increase in July 2025. This represents a slowdown from the 3.3% rate in June, yet it surpassed market expectations of 3%. This sustained high reading keeps the index well above the Bank of Japan's (BOJ) target of 2%, fueling speculation about potential shifts in policy. Analysts anticipate that core inflation will persist above 3% for an extended period, strengthening predictions of a possible BOJ interest rate hike in October. During its July meeting, the central bank raised its inflation forecast and indicated a willingness to consider a rate increase before the year's end. Nevertheless, Governor Kazuo Ueda remained cautious, emphasizing that "underlying inflation" has not yet consistently aligned with the 2% benchmark.