Japan’s Long-Term Interest Rates Hit 30-Year High of 3%
Japan’s long-term interest rates reached a 30-year high of 3.005% on September 1, as Tokyo bond markets reacted to a record national budget request and persistent worries over fiscal discipline.
On September 1, Japanese long-term interest rates reached a 30-year high of 3%, with the yield on 10-year government bonds hitting 3.005%. This marked the highest level for these rates since September 1996. The spike was attributed to expectations of interest rate hikes by the Bank of Japan, amplified by concerns over the government's deteriorating fiscal health.
The Ministry of Finance's annual budget request for fiscal 2027, due by August 31, is projected to reach a record ¥143 trillion. This growing budget is attributed to increasing social security costs from an aging population, higher interest payments on national debt, and funds earmarked for growth sectors. The decision to reduce the consumption tax on food without a plan to cover the fiscal gap further eroded market confidence.
The situation was compounded by the surge in US long-term interest rates due to speculation about the Federal Reserve raising rates by year-end. Persistent worries about Middle East instability potentially driving up energy prices and inflation lingered.
Written by urgent.news from Nippon.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.