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Quarterly Survey of Chiefs Japani A report from manufacturers released Monday shows that business sentiment is improving to its best level in four years, despite President trump Tariffs on goods from US allies were increased to a baseline level of 15%.
The Bank of Japan is bound to take into account the results of its quarterly “Tankan” survey during a policy meeting this week, when it is expected to raise its benchmark interest rate. Analysts said the strong results could prompt the BOJ to push for a rate hike of 0.25 percentage points that would take the key rate to 0.75%.
That expectation weighed on Bitcoin’s price early Monday, as it fell from nearly $92,000 to below $88,000. Higher rates would likely prompt Japanese investors to move funds back home, reducing demand for the cryptocurrency.
While the US Federal Reserve is cutting rates to counter the weak jobs market, Japan’s central bank is moving in the other direction as it grapples with inflation and a weak currency. The economy shrank at an annual rate of 2.3% in July-September.
Still, the BOJ survey showed that the number of major producers expressing optimism rose to 15 from 14 the previous quarter, the highest level in four years. The index represents the percentage of companies reporting positive conditions minus the percentage of companies reporting adverse conditions.
It said the sentiment measure for all companies increased from 15 to 17.
“The survey made all the right conclusions from the Bank of Japan’s perspective,” Abhijit Surya said. capital economics Said in a report. “This showed that business conditions are improving, profit margins remain high and companies are upbeat about their investment intentions.”
The latest agreement between Japan and the Trump administration sets a 15% tariff on its exports to the US, down from a previous plan for a 25% tariff. To win the agreement, among other things, Japan promised to invest $550 billion in the United States.
While the BOJ’s overall survey showed an improvement, forecasts for the next quarter were less positive, and businesses expected inflation to remain above the central bank’s target range of 2.4%.
The Bank of Japan has kept its key interest rate near or below zero for years, trying to promote faster economic growth by keeping borrowing costs very low.
Its policymaking is complicated by the fact that Japan’s population is shrinking and aging rapidly. This has led to a shortage of workers which has led to a gradual increase in wages. This should prompt consumers to spend more, but income growth has lagged behind inflation, reducing their appetite for spending.
Prime Minister Sanae Takaichi Like his predecessors, he has pledged to revive the economy. Last month, his cabinet approved a 21.3 trillion yen ($135.4 billion) stimulus package to boost growth through expansionary government spending and relieve the impact of high prices.