Japan's Business Confidence Surges Amid Inflation Expectations

Japan's business confidence has improved in the September quarter, according to a central bank survey. The results showed that sentiment among large manufacturers rose to plus 24 from plus 22 in June, exceeding market expectations of plus 25.

The survey also indicated that firms expect inflation to reach 2.6 percent three years ahead and 2.5 percent five years ahead, suggesting that price growth will remain above the central bank's 2 percent target for an extended period.

The Bank of Japan lifted interest rates to a 31-year high last month, and its governor has indicated that the central bank has entered a new phase centered on keeping inflation from exceeding its target, leaving the door open to further rate increases.