Japan’s 10-year government bond yield rose to around 2.64% on Friday after Bank of Japan Deputy Governor Ryozo Himino signaled that the central bank will continue to raise interest rates, while closely monitoring the risk that underlying inflation could overshoot its 2% target. Himino noted that Japan’s economy remains resilient, underpinned by robust corporate earnings and rising household incomes.
Earlier in the week, the Bank of Japan lifted its policy rate by 25 basis points to 1% in a bid to curb inflation and shore up the weakening yen. At the same time, data showed that core inflation held steady at 1.4% in May, matching market expectations and suggesting that underlying price pressures remained moderate, despite concerns that higher energy costs could push inflation higher.
Himino’s remarks strengthened expectations that the BOJ will stick to a gradual tightening course, provided economic and price developments continue to unfold in line with its projections.
