Japan’s 10-year government bond yield rose to around 2.45% on Monday, moving closer to levels not seen in nearly three decades as investors positioned for the upcoming Bank of Japan policy decision, where rates are widely expected to remain unchanged. Still, the central bank may raise its inflation outlook while lowering its growth forecast to account for the economic impact of the Middle East conflict. BOJ Governor Kazuo Ueda faces the challenge of reinforcing the bank’s commitment to gradual policy normalization to provide support for the yen, which has weakened amid surging oil prices linked to the Iran war. Last week’s data showed Japan’s core inflation accelerated for the first time in five months, rising to 1.8% in March from 1.6% in February, while headline inflation edged up to 1.5% from 1.3%.
