Japan’s 10-year government bond yield rose to around 2.44% on Friday, hitting its highest level in more than a week as fresh inflation data pointed to renewed price pressures driven by higher energy costs linked to the Iran conflict. Core inflation accelerated for the first time in five months, picking up to 1.8% in March from 1.6% in February, while headline inflation inched up to 1.5% from 1.3%.
Even so, both measures remained below the Bank of Japan’s 2% target, giving policymakers limited grounds to consider an imminent shift in monetary policy. The BOJ is widely expected to leave interest rates unchanged at its upcoming meeting as it weighs rising geopolitical risks.
Stalled US–Iran peace efforts and continued disruptions in the Strait of Hormuz are intensifying inflationary pressures and stoking concerns over global growth. The resulting increase in energy prices has also dragged on Japanese assets, underscoring Japan’s heavy dependence on imported oil from the Middle East.
