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Tankan Shows Steady Corporate Confidence, Raising Odds of BOJ October Hike

Stronger readings keep a policy move on the table despite tariff-related uncertainty.

Overview

  • Confidence among large manufacturers rose to +14 in September, the highest since December 2024, while sentiment for large non‑manufacturers held at +34.
  • Big companies lifted full‑year capital expenditure plans to a 12.5% increase for the fiscal year ending March 2026, topping forecasts.
  • Both large manufacturers and non‑manufacturers expect conditions to worsen over the next three months, citing concerns over U.S. trade policy and costs.
  • Markets now see a significant chance the Bank of Japan could raise rates to 0.75% at its October 29–30 meeting from 0.5% currently.
  • Corporate inflation expectations were steady at 2.4% for one, three, and five years ahead, even as August data showed slumps in exports and factory output.