Japan’s long-term interest rate temporarily rose to 3.015%, and an outlook has been presented for it to rise to the mid-3% range by the end of next fiscal year. Expectations of further Bank of Japan rate hikes and concerns about worsening fiscal conditions are cited as the backdrop.
Japan’s long-term interest rates have continued to trend higher, with the yield on newly issued 10-year Japanese government bonds temporarily reaching 3.015% on 2 September.
The main factors cited for the rise in long-term interest rates are growing expectations of further Bank of Japan rate hikes and concerns about worsening fiscal conditions in Japan.
The Outlook Report identified higher import prices as an upside risk to prices, and the market is closely watching the impact of coordinated intervention by Japan and the United States.
Our outlook indicates that long-term interest rates reaching 3% is only a waypoint, and that they could rise to the mid-3% range by the end of fiscal 2027.