Japan’s two-year government bond yield is closing in on the key 2% threshold as investors ramp up bets on further Bank of Japan rate hikes. The yield, which is sensitive to expectations for monetary policy, rose as much as four basis points to 1.975% on Monday, its highest since 1995. Other maturities also came under pressure, with the five-year yield rising three basis points to 2.43%.

The moves come as investors become concerned the BOJ may be falling behind the curve after Governor Kazuo Ueda offered limited guidance on the pace of future tightening following a widely expected rate hike earlier this month. That’s fueling expectations policymakers may ultimately need to raise rates more aggressively, particularly as a hawkish Federal Reserve threatens to keep the US-Japan rate gap wide. The central bank could raise its benchmark rate for a second straight month in October, Kazuo Momma, a former executive director in charge of monetary policy, said in an interview with Bloomberg. This timeline is earlier than many economists expect. Overnight index swaps imply about a 40% chance of an October move, with another 25-basis-point increase fully priced by December.

The yen’s weakness is adding to the case for tighter policy. US President Donald Trump shared concerns about the currency during a recent meeting with Japanese Prime Minister Sanae Takaichi, while Finance Minister Satsuki Katayama said Takaichi “is not a reflationist,” seeking to ease concerns that the government would pressure the BOJ to keep rates low. Trades positioned for faster BOJ tightening are gaining traction as politicians in Japan and overseas put greater focus on the weak yen, SMBC Nikko Securities strategists including Ataru Okumura wrote in a note. Fiscal expansion and higher commodity prices across major economies could also reinforce expectations that Japan will eventually need tighter policy to contain inflation.