Japan’s 10-year government bond yield fell about 3 basis points to 2.15% on Thursday, pulling back from near 27-year highs even as Bank of Japan Governor Kazuo Ueda reassured markets that he still intends to lift interest rates if economic and price developments move in line with forecasts. Ueda signaled that the recent market volatility stemming from speculation that Prime Minister Sanae Takaichi may call a snap election next month has not forced the BOJ to steer away from its rate-hiking plans. Takaichi is widely expected to call for a snap election to advance expansionary fiscal policies, which has weighed on bond prices and the yen due to concerns about the country’s debt-funded spending. Meanwhile, the central bank is still widely expected to hold policy steady next week, with markets betting on the next rate hike around June.
