Japan interest rates rise following Bank of Japan policy shift

Following the Bank of Japan's decision to raise the policy interest rate to approximately 1.25%, Japanese financial institutions are significantly increasing interest rates on savings and bonds.

Japan Post Bank has announced that the interest rate for ordinary savings and ordinary savings accounts will rise from 0.400% to 0.500% per annum, effective November 9. This adjustment applies automatically to existing balances without requiring new procedures.

Major commercial banks, including Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho, are scheduled to increase ordinary deposit rates to 0.5% starting November 2. Additionally, interest rates for Japanese government bonds (JGBs) have seen a dramatic surge; for instance, the 5-year fixed-rate individual government bond rate rose to 2.24% in September, a more than 40-fold increase compared to July 2023 levels.

While rising rates increase costs for mortgage holders, they provide financial benefits to savers, particularly retirees with significant liquid assets. Some online banks are offering even higher rates, such as Aozora Bank, which is raising its rate on deposits up to 1 million yen to 1.2% in October.