FX.co ★ Japan 10-Year Yield Eases Ahead of BOJ Decision

Japan’s 10-year government bond yield eased to approximately 1.57% on Monday, retreating slightly from almost 17-year highs as investors anticipated the Bank of Japan’s policy decision scheduled for this week. The central bank is largely expected to maintain current interest rates due to ongoing concerns about the economic effects of the recent U.S. tariffs. Nonetheless, it is probable that the BOJ will revise its inflation forecast upward in its quarterly outlook, acknowledging ongoing price pressures. Investors will closely monitor updates on the BOJ’s strategy for purchasing Japanese government bonds, as these could impact yield trends. In the previous week, yields on Japanese government bonds increased following a trade agreement between the U.S. and Japan that established a 15% tariff on Japanese goods exported to the U.S.—a significant decrease from the 25% initially suggested by President Donald Trump. At the same time, Tokyo's inflation figures for July remained significantly above the BOJ’s 2% target, bolstering expectations that further monetary tightening might be forthcoming.