Japan Eyes FY 2027 Assumed Bond Interest Rate at 3.8 Pct
Tokyo, Aug. 21 (Jiji Press)--Japan's Finance Ministry is considering setting the assumed interest rate on long-term Japanese government bonds at 3.8 pct in its fiscal 2027 budget request, informed sources said Friday. The assumed interest rate, used to calculate the government's debt-servicing costs, is expected to be raised significantly from 3.0 pct in the fiscal 2026 budget, reflecting t...
The Japanese Finance Ministry is contemplating setting the assumed interest rate for long-term Japanese government bonds at 3.8 percent in its fiscal 2027 budget proposal, according to informed sources. This rate, which is utilized to estimate the government's debt servicing expenses, is anticipated to experience a substantial increase from the 3.0 percent rate included in the fiscal 2026 budget. The escalation is a direct response to the recent surge in long-term interest rates.
The anticipated rise in debt servicing costs is a significant concern. The assumed rate is determined by adding approximately 1.1 percentage points to the present interest rate levels, accounting for the potential of abrupt rate hikes. This figure was initially established at 2.6 percent in the fiscal 2026 budget request. However, it was subsequently raised to 3.0 percent during the budget compilation process at the end of 2025, following a sharp uptick in long-term rates due to apprehensions over Prime Minister Sanae Takaichi's expansionary fiscal policies.
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