BOJ Official Signals Possible Rapid Rate Hikes Amid Middle East Tensions

Japanese government bond (JGB) yields rose on Thursday due to escalating Middle East tensions and higher oil prices.

The benchmark 10-year JGB yield increased by 5 basis points to 2.93%, while the 2-year yield, sensitive to monetary policy expectations, added 1.5 bps to 1.845%.

The rise in yields came after Bank of Japan (BOJ) board member Kazuyuki Masu suggested that the central bank may need to raise interest rates rapidly if inflation accelerates, given Japan's accommodative financial conditions.

Masu's comments align with market expectations that the BOJ will raise rates next week. Market players will closely watch Governor Kazuo Ueda's post-meeting press conference for clues on the pace of further tightening.