JGBs extend selloff as hawkish BOJ board member calls for faster-paced rate hikes

Business Recorder reported that Japanese government bond yields climbed further on Wednesday after a hawkish Bank of Japan board member pressed for faster interest rate increases. The five-year yield rose 4 basis points to a record 2.295%, while the two-year yield edged up to 1.84%, its highest level since April 1995. Board member Hajime Takata said the central bank must move flexibly on rate hikes after assessing domestic financial conditions and overseas developments.

Takata was the lone dissenter when the BOJ kept its short-term rate at 1% in July, arguing for an increase to 1.25% to head off inflation stemming from overseas demand shocks. Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management, read his remarks as a sign that a rise this month is all but assured and that tightening will continue at an unusual pace. Yields are climbing across major bond markets, which the report links to investor unease over inflation and government debt that could weigh on consumers and businesses.