Confidence among Japan’s large manufacturers has surged to its highest level in four years, bolstering market anticipation that the Bank of Japan (BOJ) will raise interest rates this week. The BOJ’s quarterly Tankan business survey, released Monday, revealed that the business sentiment index climbed to 15 this month, up from 14 in September. This figure aligns precisely with the median economist forecast from a Bloomberg poll.
The gauge for large non-manufacturers remained steady at 34, holding near its strongest level since the early 1990s. A positive reading indicates that more companies perceive current conditions as ‘favourable’ rather than ‘unfavourable’. The Tankan survey is one of the most closely watched data sets issued by the BOJ.
The survey suggests that Japanese businesses have, to date, largely avoided substantial adverse effects from US tariffs, which the central bank has identified as a source of uncertainty for several months. Gains were seen among oil and coal product makers. The latest results strengthen the argument for Governor Kazuo Ueda’s board to potentially raise rates on Friday, marking the first increase since January.
