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(Changes headline, adds comments, updates futures levels)
By Junko Fujita and Brigid Riley
TOKYO, Sept 22 (Reuters) - Japanese government bond (JGB) yields were mostly flat on Friday after the Bank of Japan (BOJ) kept its dovish policy unchanged, while JGB futures gave up gains.
After a two-day meeting, the BOJ maintained its ultra-low interest rates and pledged to keep supporting the economy until inflation sustainably hits its 2% target.
The 10-year JGB yield dipped as low as 0.735% before settling flat at 0.745%, its highest since September 2013.
The 10-year futures reacted positively to the decision, extending gains. However, they later changed course to end 0.01 point lower.
"There have not been much speculative moves in the market ahead of the policy meeting," said Kentaro Hatono, a fund manager at Asset Management One.
"Market players anticipate the yields to rise in the future. They would want to sell JGBs when yields fall rather than buying them now."
Investors are awaiting the next policy meeting in October, when the BOJ will issue its quarterly outlook report, said Shotaro Kugo, a senior economist at Daiwa Institute of Research.
"With prices rising rapidly, the BOJ's outlook will be a gauge for its rate policy."
The BOJ's decision on Friday came after data showed Japan's core inflation stayed above the central bank's 2% target for the 17th straight month.
The BOJ is a laggard in a global monetary cycle that has seen the U.S. and European central banks tighten policy aggressively over the past year, and in recent meetings signal their resolve to keep borrowing costs high to rein in inflation.
With inflation exceeding the BOJ's target and the yen renewing its slide, markets were focusing on any signals BOJ Governor Kazuo Ueda might give on the timing of a policy shift at his media briefing.
However, investors saw no surprises. "What he said at the briefing was within what the BOJ decided on its policy," said Hatono.
"The BOJ's maintenance of its monetary easing stance makes it inevitable that yen depreciation pressure will persist," said Ryutaro Kimura, a fixed income strategist at AXA Investment Managers.
The yen fell to a 10-month low this week, pressured by elevated U.S. Treasury yields after a hawkish pause by the Federal Reserve sparked a sell-off in bonds.
The 20-year JGB yield stood at 1.455% after falling to a one-week low of 1.435%.
The 30-year JGB yield rose 0.5 basis point (bps) to 1.690%.
On the short end, the two-year JGB yield was up 0.5 bp at 0.035%. The five-year yield touched a fresh high of 0.310% before falling 0.5 bp to 0.300%. (Reporting by Junko Fujita; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Eileen Soreng)