FX.co ★ Japan 10-Year Yield Rises on BOJ Rate Hike Bets

Japan's 10-year government bond yield reached approximately 1.82%, nearing new 17-year peaks as expectations intensify that the Bank of Japan might increase interest rates in December due to stubbornly high inflation. Several officials from the Bank of Japan have suggested a likely rise in rates soon, highlighting the inflationary effects of a depreciating yen. Governor Kazuo Ueda has emphasized the importance of additional data on wage growth and acknowledged how a weaker yen could influence underlying inflation rates. In parallel, the Japanese cabinet recently sanctioned a 21.3 trillion yen stimulus package designed to stimulate economic growth and assist households experiencing inflationary strain. This package marks the largest since the onset of the Covid-19 pandemic and significantly surpasses last year’s 13.9 trillion yen supplemental budget, prompting concerns about Japan’s fiscal stability.