Japan’s 10-year government bond yield rose above 1.63% on Friday, moving back toward 17-year highs after the Bank of Japan kept its policy rate unchanged at 0.5% for the fifth consecutive meeting, as expected. The central bank said the economy is recovering moderately but flagged pockets of weakness and cautioned about risks from global trade policies. It also unanimously agreed to begin selling its ETF and J-REIT holdings. Meanwhile, data showed Japan’s core inflation rose 2.7% in August, slowing for the third straight month to the lowest since November 2024. Japanese yields also mirrored US Treasury yield gains after the Federal Reserve delivered a quarter-point cut on Wednesday, projecting two more reductions this year but only one in 2026, countering expectations for multiple cuts next year.