Business Confidence in Japan Rises Amid Economic Challenges
By Makiko Yamazaki
TOKYO, Oct 1 (Reuters) – Japanese business confidence has shown improvement in the third quarter, as indicated by the latest quarterly central bank survey. This uptick suggests that the economy is managing the impact of the recent Middle East conflict and strengthens the case for potential interest rate hikes.
This data is crucial ahead of the Bank of Japan’s quarterly growth and inflation forecasts expected later this month, which may provide insight into the timing of future interest rate increases following the hike in September.
According to the BOJ’s “tankan” survey, the headline index for big manufacturers’ business sentiment improved to +24 in September from +22 in June, slightly below market predictions of +25. In contrast, the sentiment for big non-manufacturers declined to +35 from +37, also missing forecasts of +36.
Businesses anticipate inflation levels of 2.6% in three years and 2.5% in five years. This indicates expectations for sustained inflation above the BOJ’s target of 2%.
Last month, the BOJ raised interest rates to a 31-year high, with its governor indicating a shift towards a focus on preventing inflation from exceeding the target, thereby paving the way for additional hikes.
(Reporting by Makiko Yamazaki; Editing by Jacqueline Wong)
