Why did the 10-year JGB yield in Japan rise above 2%?

The yield rose above 2% due to the Bank of Japan's decision to hike its key policy rate to 0.75% and signal further tightening.

What is the significance of the Bank of Japan's interest rate hike?

The hike to 0.75% is the first in three decades and marks a significant step away from Japan's long period of monetary easing.

How has the Japanese yen reacted to the BOJ's policy changes?

The yen strengthened against the dollar following the Bank of Japan's signals of continued policy normalization and rate hikes.

Home / Business and Economy / Japan Yields Break 2% Barrier After BOJ Rate Hike

Japan Yields Break 2% Barrier After BOJ Rate Hike

19 Dec

•

Summary

10-year JGB yield surpassed 2%, a significant break from decades of low rates.
Bank of Japan raised its key policy rate to a 30-year high of 0.75%.
The yen strengthened against the dollar following the central bank's tightening signal.

Japan Yields Break 2% Barrier After BOJ Rate Hike

The benchmark 10-year Japanese government bond (JGB) yield has broken through the 2% threshold, settling at 2.015% – its highest point since August 1999. This pivotal moment signifies a potential end to Japan's prolonged battle with deflation and a departure from the era of ultra-loose monetary policy. The yield's ascent was catalyzed by the Bank of Japan's recent quarter-point rate hike, bringing the key policy rate to a three-decade high of 0.75%.

The Bank of Japan's move, while anticipated, was accompanied by signals of continued policy normalization. This has accelerated an upward trend in JGB yields, which began in early November amid speculation about government stimulus. Earlier in December, the BOJ Governor's strong indication of impending rate hikes further fueled market expectations. Historically, the 10-year JGB yield has remained below 2% since 1999, with a very brief exception in May 2006.