Bank of Japan Deputy Governor Ryozo Himino told parliament that the central bank must adjust monetary easing at a pace fitting future economic and price conditions to keep market confidence. His remarks came as Japanese government bonds rallied sharply amid a global sovereign‑debt sell‑off linked to inflation worries from the Iran conflict. Investors fear that prolonged easing could erode real returns, prompting the rally.
Himino’s language hinted at a possible rate hike, echoing Governor Kazuo Ueda’s call for the BOJ to stay accountable to markets that price in a June hike. Prime Minister Sanae Takaichi, meanwhile, urged policy stability while seeking extra budget measures to shield households from rising costs, a stance that traditionally favors easing. The extra‑budget plan funds energy subsidies, adding fiscal pressure.
Odds traders had the BOJ’s June hike probability above 80% before the premier’s meeting, slipping to roughly 76% afterward, according to overnight swap pricing. The market’s tilt toward tightening pressures bond yields higher, raising borrowing costs for the government and firms. Higher yields also squeeze corporate financing, slowing recovery.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing