Japan’s 10-year government bond yield hovered around 2.78% on Thursday, consolidating the sharp gains from the previous session amid growing expectations of tighter monetary policy. Fresh data showed that producer prices rose 7.1% year-on-year in October, beating market forecasts of 6.5% and accelerating from a 6.8% increase in September.
The stronger figures have reinforced expectations of further interest rate hikes by the Bank of Japan, with markets anticipating a move in December and additional tightening into next year. The BOJ’s latest Summary of Opinions signaled broad support among policymakers for more rate increases, noting that underlying inflation has reached levels broadly aligned with the central bank’s 2% price stability target.
Even so, board member Toichiro Asada called for caution on the timing of additional hikes, pointing out that household consumption remains subdued and that recent price gains have not necessarily been driven by robust demand.
