JGB yields little changed ahead of BOJ policy announcement

TOKYO, May 1 (Reuters) - Japanese government bond yields were little changed on Thursday as investors widely expected the Bank of Japan (BOJ) to keep the interest rates steady and remain neutral about the future rate path later in the day.

The 10-year JGB yield JP10YTN=JBTC was flat at 1.31%, after falling 1 basis point (bp) to 1.3%. The policy-sensitive two-year JGB yield JP2YTN=JBTC fell 1 bp to 0.66%.

At the two-day meeting ending later in the day, the BOJ is likely to keep the interest rates steady and cut its growth forecasts as uncertainty surrounding U.S. tariffs clouds the outlook for the world's fourth-largest economy.

The BOJ is meeting amid caution that U.S. President Donald Trump's tariff action may slow the U.S. and global economy, throwing its slow-but-steady path out of ultra-low rates into question.

Meanwhile, Japan is negotiating a trade deal with the U.S. that could include a reference to the yen and have implications for the expected path of rates.

"The BOJ will try not to give any implications for the rate path and will remain neutral until Japan and the U.S. reach an agreement on a trade deal," said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

Japan's top trade negotiator Ryosei Akazawa, in Washington for a second round of talks this week, is seeking the full removal of U.S. tariffs.

Rising prices and growing wages in Japan drove bets that the BOJ may accelerate rate hikes, sending the 10-year JGB yield to a 17-year high of 1.59% in late March.

The yield, which moves inversely to price, plunged as low as 1.105% in April after Trump announced the larger-than-expected tariffs.

Swap rates on Thursday indicated 13 basis points of rate hikes by the BOJ's policy meeting in December. 0#JPYIRPR