Overview
- Super‑long JGBs pared steep losses after Finance Minister Satsuki Katayama urged calm, with the 40‑year yield dropping about 22 basis points yet staying above 4% and the 30‑year easing toward roughly 3.7–3.8%, while the 10‑year slipped back to around 2.30% from a 27‑year high.
- The BOJ begins a two‑day meeting expected to keep the policy rate at 0.75% and upgrade growth projections as Governor Kazuo Ueda’s guidance is scrutinized for a tightening bias and the possibility of earlier moves.
- Sources cited by Reuters say some policymakers see April as a potential window for a rate hike if yen weakness persists, reflecting concern that currency-driven import costs are feeding broader inflation pressure.
- The yen has fallen about 8% since October and traders are watching USD/JPY near the 155–160 zone, where Goldman Sachs flags rising chances of official “rate checks,” FX intervention, or policy action to curb further depreciation.
- Prime Minister Sanae Takaichi’s Feb. 8 snap election and a two‑year suspension of the 8% food levy—estimated at roughly ¥5 trillion per year—have sharpened fiscal credibility worries, with officials weighing limited tools such as BOJ bond buys, slower tapering, issuance cuts, or GPIF shifts as Fitch warns larger‑than‑expected expansion would be a rating risk.