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BoJ Expected to Hike Rates Amid Yen Concerns and Global Rate Increases
Confirmed
In Short: The Bank of Japan (BoJ) is expected to hike interest rates to 1.25% this month.
Borrowers in the UK have seen the biggest rise in mortgage rates since the conflict started, surpassing other G7 countries, according to Bank of England governor Andrew Bailey. This comes as UK government borrowing costs are also on the rise, affecting mortgage rates.
The Bank of Japan (BoJ) is expected to hike interest rates to 1.25% at its September policy meeting, with 82% of economists predicting a further increase to 1.75% in the second quarter of 2027. This move is aimed at addressing persistent price pressures and the Japanese Yen's slide to 40-year lows.
The US Treasury Department announced it would repurchase $6 billion worth of 10- to 20-year government bonds, hoping to drive up demand and push down rates. This action, along with remarks by Treasury Secretary Scott Bessent, has lowered political barriers for rate hikes in Japan.
Interest rates on government bonds are rising globally, making borrowing more expensive for consumers and businesses. The yield on the 10-year Treasury reached 4.80%, the highest since early 2025, reflecting concerns about inflation and financial market conditions.
What's confirmed
- Borrowers in the UK have seen the biggest rise in mortgage rates since the conflict started, surpassing other G7 countries, according to Bank of England governor Andrew Bailey. This comes as UK government borrowing costs are also on the rise, affecting mortgage rates.
- The Bank of Japan (BoJ) is expected to hike interest rates to 1.25% at its September policy meeting, with 82% of economists predicting a further increase to 1.75% in the second quarter of 2027. This move is aimed at addressing persistent price pressures and the Japanese Yen's slide to 40-year lows.
- The US Treasury Department announced it would repurchase $6 billion worth of 10- to 20-year government bonds, hoping to drive up demand and push down rates. This action, along with remarks by Treasury Secretary Scott Bessent, has lowered political barriers for rate hikes in Japan.
- Interest rates on government bonds are rising globally, making borrowing more expensive for consumers and businesses. The yield on the 10-year Treasury reached 4.80%, the highest since early 2025, reflecting concerns about inflation and financial market conditions.
What's still developing
- "Borrowers expecting mortgage rates to drop in the coming weeks have had their hopes dashed," said Rachel Springall, from financial information service Moneyfacts.
- The latest moves on mortgage rates will be a further blow to those who are coming off much cheaper five-year deals.
- Interest rates fluctuate based on the Bank of England's base rate and market conditions For borrowers, the interest rate on a fixed mortgage does not change until it expires, usually after two or five years, and a new one is chosen to replace it.
- September 1-8 survey showed all but two of 68 economists expected the BoJ to raise rates on September 18, up from 57% in a previous poll.
- More than one-third, 24 of 66 economists, anticipated the Japanese central bank would follow with another hike to 1.50% in either October or December, roughly double the share in August.
- The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners.
- The Nasdaq Composite, which is sensitive to interest rates given how many major tech companies it tracks, ended the day down 0.6%.
- Robin Brooks, a senior fellow at the Brookings Institute, said Bessent's moves and Warsh's promise to corral inflation have likely kept longer-term rates lower than they would otherwise be and betray a rising concern about where yields are headed.