Nomura's foreign exchange strategist said that the latest short survey and Japan's payroll report showed that there was no obstacle for the Bank of Japan to raise interest rates later this week. Resilient business conditions and the CPI outlook for the next few years have strengthened expectations that the Bank of Japan may raise interest rates by 25 basis points on Friday; the swap market expects a 95% chance that the central bank will raise the policy interest rate to 0.75% this week, and it is expected to raise interest rates again by October 2026. “The Bank of Japan's interest rate hikes in the past have boosted corporate borrowing costs; however, companies have yet to consider these rate hikes to be sufficiently austerity to have a significant impact on their business activities,” a team of strategists led by Yujiro Goto wrote in the report. They added that in the latest survey published earlier in the day, most businesses said their cash flow was “good.” Although Nomura believes that the Bank of Japan may not make a major update to the neutral interest rate forecast at this month's meeting, the bank expects that the central bank “may continue to think that the actual policy interest rate is still lower than the neutral interest rate, so it is still loose.”

Nomura's foreign exchange strategist said that the latest short survey and Japan's payroll report showed that there was no obstacle for the Bank of Japan to raise interest rates later this week. Resilient business conditions and the CPI outlook for the next few years have strengthened expectations that the Bank of Japan may raise interest rates by 25 basis points on Friday; the swap market expects a 95% chance that the central bank will raise the policy interest rate to 0.75% this week, and it is expected to raise interest rates again by October 2026. “The Bank of Japan's interest rate hikes in the past have boosted corporate borrowing costs; however, companies have yet to consider these rate hikes to be sufficiently austerity to have a significant impact on their business activities,” a team of strategists led by Yujiro Goto wrote in the report. They added that in the latest survey published earlier in the day, most businesses said their cash flow was “good.” Although Nomura believes that the Bank of Japan may not make a major update to the neutral interest rate forecast at this month's meeting, the bank expects that the central bank “may continue to think that the actual policy interest rate is still lower than the neutral interest rate, so it is still loose.”