Japanese bond yields may be forced up by rising inflationary pressures, warns ex-BOJ official

Tokyo

THE Bank of Japan (BOJ) might be forced to allow long-term government bond yields to rise early next year if inflation takes off in Japan, and that could thwart the central bank's controversial policy of "yield curve control", a former governor of the Japanese central bank warned on Friday.

The yield on the 10-year government bond may need to rise to between 0.5 per cent and one per cent from current slightly negative levels, said Sayuri Shirai, who was for five years a member of the BOJ's Policy Board and is now an economics professor at Tokyo's Keio University.