Japan’s Mixed Business Outlook Eases Pressure on BOJ for Immediate Rate Hike

Japan's mixed business sentiment eases pressure on BOJ, with manufacturers' confidence at eight-year high while non-manufacturers decline.

Editorial Desk

October 1, 2026 One Min Read

POLICY WIRE — Tokyo, Japan — Japanese manufacturers saw a surge in confidence to an eight-year high during July-September, according to the Bank of Japan’s tankan survey, while non-manufacturers reported a downturn, creating a mixed economic outlook that may reduce the likelihood of another rate increase this month.

The survey, which measures business sentiment across sectors, showed that manufacturers benefited from strong global demand for AI and chips, as well as improved profit margins. However, weak consumer spending on durable goods appeared to temper optimism.

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Corporate inflation expectations remained stable, not rising from the previous quarter, which eased some pressure on the BOJ to follow its recent rate hike. The central bank raised rates to a 31-year high of 1.25% last month to counter inflation driven by energy costs and a weak yen. Analysts had anticipated further hikes, but the latest data suggests caution may prevail.

Reporting by Policy-Wire (PW)

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