BOJ Dilemma Deepens as Japan's Economy Growth Slows

Japan's economy grew for a third consecutive quarter, but at a slower pace than expected. The second-quarter gross domestic product (GDP) rose 0.3% from the previous quarter, or 1.1% at an annualized rate, after adjusting for inflation.

The Cabinet Office attributed the weaker growth to domestic demand, which subtracted 0.2 percentage point from growth and turned negative for the first time in three quarters.

Private consumption, which accounts for about half of GDP, fell 0.02%, marking a decline after eight consecutive quarters of growth.

The Bank of Japan (BOJ) is facing pressure to raise interest rates due to yen weakness and inflation concerns. The yield on Japan's 10-year government bond rose to its highest level since September 1996, reaching 2.93% in Tokyo bond trading.