The Bank of Japan stated that the rise in inflation rates is the reason for the increase in bond yields.

A report released by the Bank of Japan indicates that changes in economic fundamentals, such as the acceleration of core inflation in Japan, may be the reasons behind the recent rise in long-term interest rates. The report states that as the Bank of Japan continues to reduce the scale of its government bond purchases, the functionality of the Japanese government bond market is significantly improving. The report also highlights that, given the still massive scale of Japanese government bonds held by the Bank of Japan, its holdings continue to suppress term premiums. The term premium refers to the additional return required by investors for holding longer-term assets.