Japan Long-Term Rate Hits 26-Yr High after BOJ Decision

Jiji Press

14:19 JST, December 19, 2025

TOKYO (Jiji Press) — The benchmark 10-year Japanese government bond yield, the country’s key long-term interest rate, hit a 26-year high in Tokyo trading Friday in a bond sell-off after the Bank of Japan’s decision to raise interest rates.

The yield on the newest 380th 10-year JGB issue rose as high as 2.015%, the highest level since August 1999.

JGBs were hit by selling as speculation spread among market players that the BOJ will continue to raise interest rates next year after its decision Friday to hike the policy rate from around 0.5% to around 0.75%, a level unseen in 30 years.

Government bonds were under downward pressure also due to lingering concerns that the expansionary fiscal policy of the administration of Prime Minister Sanae Takaichi may lead to a deterioration in the supply-demand balance of the JGB market.

Japan’s key long-term rate entered a downward trend after the country’s asset-driven bubble economy collapsed in the early 1990s. After falling below 2% in the late 1990s, the key long-term rate fluctuated at very low levels, reflecting protracted deflation and the economic downturn that followed the 2008 collapse of U.S. investment bank Lehman Brothers.

The decline accelerated after the BOJ began aggressive monetary easing under then Governor Haruhiko Kuroda in 2013. The key long-term rate fell as low as minus 0.3% after the central bank introduced a negative interest rate policy in 2016.

The BOJ ended the policy in 2024 to start monetary policy normalization as negative effects of superlow interest rates became evident. Long-term rates switched to an uptrend and accelerated their ascent after the Takaichi administration was launched in October this year.