Why Are Long-Term Interest Rates Rising? Japan Is in a “De Facto Currency Crisis”／The Risks of the Government Disregarding “Bank of Japan Independence”／The Fallout from the Bank of Japan’s Delayed Rate Hikes／German Bund Yields as a Benchmark／Could the Rise in Interest Rates “Pause”?

Japan’s long-term interest rates have reached their highest level in roughly 30 years, with the yield on newly issued 10-year government bonds nearing the 3% mark. The program introduces market expectations and developments in the financial markets as factors behind this sharp rise.

Kato Izuru (加藤 出), president and chief economist of 東短リサーチ, identifies three reasons for the rise in long-term interest rates and explains the relationship between Bank of Japan rate hikes and long-term interest rates. The program also discusses fiscal management under the Takaichi administration and the impact of a cut in the consumption tax on food. The stated reasons are, first, delays in monetary policy and the interest rates priced in by the market; second, the issue of independence between the government and the Bank of Japan; and third, the weaker yen and global interest-rate trends.

The outlook includes discussion of how quickly the Bank of Japan should raise rates and whether limiting rate hikes to 0.25% would be insufficient. Kato’s view is also presented on how long-term interest rates may move in the future. It is clearly stated that the data in the video reflects information available when it was recorded.