Amid expectations that the Bank of Japan (BOJ), the country's central bank, will accelerate interest rate hikes, the yield on 10-year Japanese government bonds, a benchmark for long-term interest rates, has risen to a 30-year high.

According to the Nikkei and the Yomiuri Shimbun today (September 16), the yield on Japan's 10-year government bonds reached 3.035% in the Tokyo bond market yesterday, marking the highest level in 30 years since August 1996.

This is seen as being driven by expectations that the worsening situation in the Middle East has caused crude oil futures prices to surge, leading to rising inflation and prompting the Bank of Japan to accelerate its rate hikes.

However, the Nikkei reported that there are contrasting views: while some argue that accelerating rate hikes by the Bank of Japan will lead to the stabilization of long-term rates, others contend that the bank's target level for rate hikes is higher than previously expected, which is fueling the rise in long-term yields.

Within the Bank of Japan, the view has been raised that if the risk of inflation is suppressed through rate hikes, long-term yields will stabilize. However, the market views the acceleration of rate hikes by the central bank as acting as pressure for further increases in long-term interest rates.

Measures such as the food consumption tax cut by the Sanae Takaichi administration are also evaluated as factors fueling the rise in long-term yields by leading to fiscal instability.

On September 15, the Japanese government decided at a Cabinet meeting to lower the food consumption tax rate to 1% for two years starting in April next year.

The Nikkei pointed out that if the upward trend in long-term interest rates continues, anxiety over the economy and public finances will increase, and there is also a possibility that the Takaichi administration could pressure the Bank of Japan to curb rate hikes.

Long-term interest rates are rising not only in Japan but also in major economies such as the United States.

The yield on U.S. 10-year Treasury notes climbed to as high as 5.041% on the morning of September 15 local time, reaching its highest level since July 2007.

Germany's long-term bond yields also surpassed 3.5% to reach a 17-year high, while the UK's reached the 5.4% range, hitting a 19-year high.

(Photo: Yonhap News)