Japan’s 10-year government bond yield fell about 5 basis points to 2.62% on Thursday, its lowest level in a week, as progress in US-Iran peace talks pushed oil prices back to pre-conflict levels and eased inflation worries. As a major importer of Middle Eastern crude, Japan remains highly sensitive to geopolitical tensions in the region.
Domestically, Bank of Japan board member Naoki Tamura said the central bank should keep raising interest rates every few months, arguing that the policy rate should gradually move toward a neutral level of around 2%. He added that inflationary pressures are likely to strengthen regardless of developments in the Middle East, as higher import costs are expected to be passed on to consumers more quickly and broadly than after Russia’s 2022 invasion of Ukraine, reflecting a shift in corporate pricing behavior.
