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January 22 2013, 08:54AM

Australian bond prices are mixed ahead of an expected policy announcement from Japan's central bank.

At 0830 AEDT on Tuesday, the March 10-year bond futures contract was trading at 96.670 (implying a yield of 3.330 per cent), up from Monday's close of 96.665 (3.335 per cent).

But the March three-year bond futures contract was at 97.230 (implying a yield of 2.770 per cent), down from 97.240 (2.760 per cent).

The Bank of Japan on Tuesday concludes a two-day meeting that is expected to decide on an inflation target and could also announce fiscal stimulus measures.

ANZ head of interest rate research Tony Morriss said the local market was focused on what the Bank of Japan would do after indications Japan's prime minister, Shinzo Abe, was pushing for moves to stimulate the economy.

"There's quite a bit of expectation priced into the meeting today, with regard to them setting an inflation target," he said.

"That will be the main focus. But, we'll be looking to see if there's a continued demand for yield in this time zone."

Mr Morriss said Australian inflation data, due on Wednesday, would be the next point of interest for Australian bonds.

"After the latest New Zealand inflation report, which was surprising on the downside, we're looking for a soft number tomorrow," he said.

"But it's hard to see too much of a rally, especially if the Bank of Japan does announce an inflation target this afternoon."

Official data has shown that New Zealand's inflation was 0.9 per cent in the year to December, compared to expectations of a 1.2 per cent annual rate.