Japan plans significant bond interest rate hike to 3.8%

Japan's Finance Ministry plans to raise the assumed interest rate on long-term government bonds to 3.8% in the fiscal 2027 budget request, up from 3% in fiscal 2026. This increase reflects rising long-term interest rates and is expected to significantly raise the government's debt-servicing costs. The ministry also aims to accept unlimited funding requests under a new investment quota, leading to a record high in total budget requests for fiscal 2026.