By Kosaku Narioka

Japan's 10-year government bond yield climbed to an 11-year high on Monday, driven by growing market expectations that the Bank of Japan will take additional steps to tighten policy in the coming months.

The 10-year yield rose to 0.975%, its highest level since May 2013.

Japanese government bond yields have been climbing in recent weeks after the country's central bank in March halted much of its unorthodox easing measures, citing signs of steady inflation returning to the economy.

Investors have been speculating about the timing for the Bank of Japan's potential rate increases and a possible reduction in its government-bond purchases. The BOJ ended its negative interest-rate policy in March but said then that it would continue buying government bonds.

Last Monday, the central bank offered to buy a smaller amount of JGBs maturing in five to 10 years on the following day compared with its previous operation, and kept the lower amount on Friday. That raised market expectations for a potential reduction in the BOJ's monthly JGB purchases.

In a note on Friday, Goldman Sachs revised its JGB yield forecasts higher and said it expects the 10-year yield at 2% by the end of 2026, citing its view that the BOJ will undertake a prolonged rate-increase cycle. Goldman Sachs expects the Japanese central bank to raise its policy rate to 1.25%-1.50% by 2027, driven by a gradual but steady increase in inflation expectations.

Write to Kosaku Narioka at

(END) Dow Jones Newswires

05-20-24 0605ET