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TOKYO, Sept 25 (Reuters) - Japan's 10-year government bond yield fell on Monday, as expectations for the Bank of Japan (BOJ) shifting its ultra-loose policy earlier than expected receded.
The 10-year JGB yield fell 1.5 basis points (bps) to 0.725%, its lowest level since September 20.
The five-year yield fell 1 bps to 0.290%.
"Expectations that the BOJ would tweak its ultra-loose monetary policy has receded after comments from the BOJ Governor Kazuo Ueda at Friday's media briefing," said Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
Ueda on Friday said the central bank was yet to foresee inflation achieve its price target in a stable and sustainable manner, stressing the need to spend more time assessing data for wages and service prices before raising interest rates.
Ueda's comments came after he made comments to a local newspaper in an interview earlier this month, which investors found hawkish. The comments prompted bond sales, pushing the benchmark yield to a decade-high by the end of last week.
In the interview, Ueda was quoted as saying the BOJ could end its negative interest rate policy when its 2% inflation goal is in sight, indicating possible rate hikes by year-end.
Ueda on Monday reiterated his resolve to keep the loose policy, saying there was "very high uncertainty" on whether companies will keep raising prices and wages, as he spoke to business leaders in western Japan.
The 40-year JGB yield was flat at 1.840% ahead of an auction for the bonds with the same maturity in the next session.
The 30-year JGB yield was flat at 1.690%.
The 20-year JGB yield fell 0.5 bps to 1.450%.
The two-year JGB yield was flat at 0.030%.
Benchmark 10-year JGB futures rose 0.18 yen to 145.49.
(Reporting by Junko Fujita; Editing by Janane Venkatraman)