Japan Business Confidence Climbs to 4-Year High, Boosting BOJ Rate Hike Expectations

Japan's big manufacturers' business sentiment hit a four-year high in December, with the Bank of Japan's (BOJ) tankan survey showing a reading of +15, up from +14 in September. This marks the third consecutive quarter of improvement, showing signs of firms weathering the impact of higher U.S. tariffs. Non-manufacturers' sentiment remained steady at +34. The survey reinforces market expectations that the BOJ will raise interest rates this week, with analysts predicting a rate hike to 0.75% from 0.5%. Big firms plan to increase capital expenditure by 12.6% in the current fiscal year. However, firms expect business conditions to worsen in three months due to labour shortages and soft consumption.