A report released by the Bank of Japan indicates that changes in economic fundamentals, such as the acceleration of basic inflation in Japan, may be the reason behind the recent rise in long-term interest rates. The report said that as the Bank of Japan continues to reduce the scale of treasury bond purchases, the functioning of the Japanese treasury bond market is improving markedly. The report also pointed out that since the Bank of Japan still holds a large amount of Japanese treasury bonds, its holdings continue to lower the maturity premium. Term premiums are additional returns required by investors when holding longer term assets.

A report released by the Bank of Japan indicates that changes in economic fundamentals, such as the acceleration of basic inflation in Japan, may be the reason behind the recent rise in long-term interest rates. The report said that as the Bank of Japan continues to reduce the scale of treasury bond purchases, the functioning of the Japanese treasury bond market is improving markedly. The report also pointed out that since the Bank of Japan still holds a large amount of Japanese treasury bonds, its holdings continue to lower the maturity premium. Term premiums are additional returns required by investors when holding longer term assets.