Yen deemed “excessively weak,” as risks in the Japanese bond market raise concerns among most economists

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智通财经2026/07/23 04:26

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The latest survey shows that 70% of economists expect the Bank of Japan to raise its key interest rate to at least 1.50% by the second quarter of 2027, with more than 50% of respondents believing 1.50% will be the terminal rate. Over 85% of respondents anticipate that the central bank will raise rates to 1.25% by the end of the fourth quarter of 2026, up from 79% in the June survey.
Regarding the yen exchange rate, nearly 80% of economists believe that, relative to Japan's economic fundamentals, the current level of the USD/JPY around 160 is "too weak". This assessment is consistent with the recent ongoing weakening trend of the yen.
In terms of debt financing, nearly 60% of respondents think that rising Japanese government bond yields will have a "very" or "somewhat" worrying impact on Japan's debt financing costs over the next two to three years, reflecting growing market concerns about Japan's fiscal sustainability. Rising yields will further increase the government's interest expenditure burden — currently, the ratio of Japanese government debt to GDP remains above 200%, which is among the highest levels globally.

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Yen deemed “excessively weak,” as risks in the Japanese bond market raise concerns among most economists

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