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.