BOJ expected to raise rate to 1.25% as Japanese bond yields near three-decade high

  • The Bank of Japan is widely expected to raise its policy rate from 1% to 1.25% on Friday.
  • The 10-year JGB yield rose half a basis point to 2.990% at 0119 GMT, near a three-decade high.
  • Investors monitored Fed and BOJ meetings, the Iran conflict, Saudi Arabia’s East-West pipeline shutdown and energy prices.

Japan’s 10-year government bond yield rose half a basis point to 2.990% at 0119 GMT, remaining near its highest level in three decades as investors prepared for the Bank of Japan’s policy meeting on Friday. The BOJ is widely expected to raise its policy rate from 1% to 1.25%, the highest level since April 1995, amid persistent price pressures and expectations for faster tightening. Investors are also seeking guidance on whether another increase could follow later this year. Firm U.S. inflation data pushed Treasury yields higher, while the Iran conflict and energy prices added to market uncertainty. A more hawkish BOJ could strengthen the yen, accelerate the unwinding of yen-funded carry trades and increase volatility across global markets.

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