22.08.202503:29:22UTC+00Japan to Raise Assumed Bond Interest Rate to 2.6% for FY 2026/27

Japan's Ministry of Finance is set to increase its assumed interest rate for long-term government bonds to 2.6% for the fiscal 2026/27 budget requests, reaching its highest point in 17 years. According to a Friday report by the Yomiuri Shimbun, as relayed by Reuters, this adjustment follows a previous assumption of a 2.1% interest rate for the fiscal 2025 budget requests, which was later revised downward to 2.0% in the final budget. This anticipated rise is projected to escalate the costs associated with servicing the debt, as mentioned in the report, though it did not specify its sources. In addition, the finance ministry is reportedly planning to set aside approximately 30 trillion yen (around $202 billion) for debt servicing in its fiscal 2026/27 budget request, as per Kyodo News. This allocation would represent a new record, attributed to increasing long-term interest rates. The annual budget requests for the fiscal year starting in April 2026 are expected to be submitted to the Ministry of Finance by the end of August.