The low and stable JGB yields are explicable if many investors expect what prevailed in the past 10 years will continue into the next 10 years. However, the low growth and inflation rates are not sufficient to explain low yields on JGBs.
Long-term interest rates are determined not only by the expected growth rate and the expected inflation rate, but also by the risk premium that compensates for their uncertainties. Thus, to fully explain the low yields on JGBs, we have to discuss why the risk premium is low. In that regard, I have to point to the following two.