Japan’s Long-Term Interest Rate Hits 2.35%, Highest Level in 27 Years

TOKYO, Jan 20 (News On Japan) - Japan’s long-term interest rates, which directly influence fixed mortgage borrowing costs and broader financing conditions across the economy, continued their rapid climb and reached the 2.35% range on January 20th, marking the highest level in roughly 27 years as investors grew increasingly uneasy about Japan’s fiscal outlook and stepped up bond selling amid political pledges for consumption tax cuts that some market participants believe could become permanent.

In the bond market on January 20th, the yield on the benchmark 10-year Japanese government bond rose to 2.35%, extending a rapid upward trend and reaching its highest point since 1999.

Behind the persistent rise is growing concern about a deterioration in Japan’s fiscal outlook.

With the House of Representatives election approaching, both ruling and opposition parties have included consumption tax cuts in their campaign pledges. Some in the market believe the tax reductions could become permanent, accelerating bond selling.

Higher long-term rates are expected to raise fixed-rate mortgage costs and weigh on household finances, while also increasing the government’s interest payments on its debt. Market participants warned that rates may be nearing levels that, in theory, could begin to have a negative impact on Japan’s economy.

Source: TBS

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