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The Japan Times
Japan eyes fiscal 2027 assumed bond interest rate at 3.8%
Japan's Finance Ministry is looking to increase the assumed interest rate on long-term government bonds to 3.8% in its fiscal 2027 budget request. This marks a significant rise from the 3% assumed rate in fiscal 2026, which was previously set at 2.6% during the earlier budget planning phase. The rise in the assumed rate is attributed to climbing long-term interest rates, driven by the Bank of Japan's anticipated policy rate hikes and global inflationary pressures. As a consequence, Japan's debt-servicing costs are expected to rise substantially, with a forecasted budget request exceeding ¥122.4 trillion for fiscal 2026.
MonitorConfidence: MediumShort term horizon
Published 22 Aug 2026, 04:45 UTC2 min read
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Summary
TL;DR
- Finance Ministry considers 3.8% assumed interest rate for fiscal 2027
- Current assumed rate is 3% in the fiscal 2026 budget
- Debt-servicing costs to rise significantly due to interest rate hikes
- Recent long-term rates driven by concerns over fiscal policy
- Government budget requests expected to exceed ¥122.4 trillion
Interesting facts
- The yield on Japan’s 10-year JGB recently reached its highest in nearly 30 years.
- The assumed interest rate reflects the risk of sudden spikes in interest rates.