Japanese government bond futures fell in early Tokyo trading, pressured by mounting concerns over accelerating inflation driven by rising oil prices and a weakening yen. The yen's decline threatens to push up import costs in Japan, amplifying inflationary pressures. These developments have sparked speculation about a faster pace of Bank of Japan rate increases.

Market participants are closely watching the BOJ's two-day policy meeting, though most expect rates to remain unchanged. Attention will center on the central bank's statement and Governor Ueda's press conference for clues about future policy direction. The yen's weakness adds complexity to the BOJ's inflation outlook as policymakers balance growth and price stability.

Benchmark 10-year JGB futures dropped 0.32 yen to 131.23 yen, reflecting investor unease. The decline signals growing market anxiety about inflation risks in Japan's economy. With oil prices climbing and import costs rising, traders are reassessing their positions ahead of the BOJ's policy announcement.