Japan's Tankan Survey Suggests No Rate Hike This Month
Japanese manufacturers' confidence reached an eight-year high in the July-September quarter, according to the central bank's tankan survey. The headline index measuring big manufacturers' business sentiment rose to +24 from +22 in June, exceeding market estimates of +25.
The robust demand for chips and AI-related goods contributed to the improved sentiment, while manufacturers also benefited from passing on rising raw material costs to consumers. However, non-manufacturers' mood soured, with big non-manufacturers' sentiment declining to +35 from +37 in June.
Despite the mixed picture, the survey suggests that the Bank of Japan (BOJ) may not raise interest rates again this month. Corporate inflation expectations remained elevated but did not accelerate from three months earlier, and companies forecasted inflation at 2.6% within three years and 2.5% in five.
According to economist Takeshi Minami at Norinchukin Research Institute, 'Today's tankan adds the case for further rate hikes... but doesn't offer enough for a consecutive rate increase.'