The Finance Ministry will set a key rate used to calculate the country¡¯s likely interest payments on bonds next fiscal year at 3.0%, the highest in nearly three decades, according to people familiar with the matter.
The interest rate underpinning debt servicing costs in the year beginning April 2026 will rise from an initial 2.6% set during August¡¯s budget request stage, according to the people. The level marks a sharp stepping up from 2% used in the current fiscal year and would be the highest since fiscal 1997, likely pushing up Japan¡¯s debt servicing to a new record.
The figure serves as a yardstick for calculating the cost of coupon payments on government debt. For freshly issued bonds and rolled over debt in the coming year, those payments will need to be higher to attract buyers in a market with rising yields.
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