TOKYO, April 1 - Business sentiment among large Japanese manufacturers rose in the first quarter of 2024, according to the Bank of Japan’s "tankan" survey.
The headline index reached +17 in March, up from +16 in December. This exceeds the median forecast of +16. Non-manufacturer sentiment held steady at +36.
However, firms anticipate worsening conditions in the next quarter due to rising fuel costs and supply chain disruptions linked to the Iran war.
The conflict has closed the Strait of Hormuz, a critical chokepoint for global oil flows, pushing crude prices higher and strengthening demand for the U.S. dollar.
The Bank of Japan faces growing pressure to raise borrowing costs further amid persistent inflation above its 2% target. In December, it raised rates to a 30-year high of 0.75%, signaling progress toward its inflation goal.
With the yen weakening, markets now price in a 70% chance of another rate hike in April.