If asked, 'How high will Japanese interest rates go?' — Forecasts from 119 bond professionals (October 2026 edition)
Former Bank of Japan official, PhD in Mathematics from the University of Tokyo, and former Chief Interest Rate Strategist at Nomura. In the Nikkei Veritas analyst rankings, I achieved the first-ever 3rd place in two categories (Bonds and Securitization). Based on my experience of making 400 proposals a year to institutional investors, I will break down the ‘essence of finance’ that bankers and securities professionals can use directly in client talks and internal presentations. All past articles are available exclusively to members (free articles move to members-only two days after publication).
When asked this by a client, how would you answer?
The results of the monthly bond market survey conducted by QUICK (October, survey period: October 27 to October 29, 2026) have been released.
In this survey, over 100 bond investment professionals provided their forecasts for interest rates in Japan and overseas.
In this article, I will introduce ‘how professionals are forecasting future Japanese interest rates’ based on the latest survey results.
This time, I will briefly share the survey results and a short analysis of them.
■ Main Point 1: Japan’s 10-year interest rate to hover around 3.0%
Here are the historical 10-year interest rates in Japan and the average forecasts from the QUICK survey.
The forecast for the 10-year interest rate as of April 2027 is 2.998%, or almost 3.0%. The 3.1% reached the other day is considered the ceiling, and the forecast is that the 10-year interest rate will generally remain flat from here on.
■ Main Point 2: BOJ expected to raise rates to around 2%
Here are the forecasts regarding the Bank of Japan’s policy interest rate. As of December 2027, the average is 1.9%, so the expectation is for a rate hike to either 1.75% or 2.0%.
Incidentally, the policy interest rate for December 2027 was seen at 1.4% (meaning 1.25% or 1.5%) in the first half of this year, but the level has since been revised upward.
However, after rising to 1.9% in the previous survey, it has remained unchanged this time.
Since a rate hike to near the 2.0% milestone is already being factored in, it may be that expectations for further rate hikes are becoming harder to push higher.
If that is the case, as mentioned at the beginning, a scenario where the 10-year interest rate does not rise much is also conceivable.
Thank you for reading to the end. Since free articles become unavailable two days after publication, we recommend joining our membership if you wish to view past articles. Takenobu Nakajima’s Money.lab | Takenobu Nakajima (Former Bank of Japan official, PhD in Mathematics from the University of Tokyo)
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