Capital Economics: Bank of Japan Tankan Survey Strengthens the Case for Rapid Rate Hikes

Golden Ten Data July 1 – Marcel Thieliant, Head of Asia-Pacific at Capital Economics, stated that the Bank of Japan’s Tankan survey released earlier has reinforced the case for a rapid interest rate hike. He pointed out that the headline index measuring sentiment among large manufacturers surged to +22, the highest level since the global financial crisis. “The sentiment among large non-manufacturing firms in the first quarter was already at its highest level since the early 1990s, but still edged up further from +36 to +37,” he added. In addition, companies’ inflation expectations for the next five years climbed from 2.5% to 2.6%. This figure “supports the view of those members within the Bank of Japan who warn of upside risks to inflation.”