Finance Minister Sadakazu Tanigaki said it is undesirable for interest rates to rise while deflation persists in Japan, the Kyodo News Service reported "Mild deflation still continues in Japan...it is undesirable that interest rates rise alone, which has negative effects on the economy," Kyodo quoted Tanigaki as telling a news conference. "We will continue to closely monitor developments in interest rates and bond markets," he said. The comments reflected the government's concerns that rising yields in government bonds would increase its interest payments. On Tuesday, the yield on the bellwether 10-year government debt surged to a near-one year high of 1.585 pct.