Japan Eyes FY 2027 Assumed Bond Interest Rate at 3.8 Pct

Tokyo, Aug. 21 (Jiji Press)--Japan's Finance Ministry is considering setting the assumed interest rate on long-term Japanese government bonds at 3.8 pct in its fiscal 2027 budget request, informed sources said Friday.

The assumed interest rate, used to calculate the government's debt-servicing costs, is expected to be raised significantly from 3.0 pct in the fiscal 2026 budget, reflecting the recent climb in long-term interest rates.

Japan's debt-servicing costs are expected to balloon as a result.

The assumed rate is calculated by adding around 1.1 percentage points to current interest rate levels to account for the risk of sudden spikes.

It was set at 2.6 pct in the fiscal 2026 budget request, but was raised to 3.0 pct during the budget compilation process at the end of 2025, after long-term rates shot up on concerns over the expansionary fiscal policy of Prime Minister Sanae Takaichi.

[Copyright The Jiji Press, Ltd.]