ING economist Min Joo Kang highlights that Japanese business sentiment remains relatively firm, as evidenced by the Tankan Survey and the Manufacturing PMI, both of which are in expansionary territory [1]. The Manufacturing PMI was revised up to 51.6 from its flash reading of 51.4, marking three consecutive months of expansion, although it is below February’s figure of 53 [1]. The Tankan Survey indicates that despite higher oil prices and supply constraints, business sentiment is holding up, and the output price index suggests that higher prices are expected in both the short and medium terms, potentially raising inflationary pressure [1].
ING notes that the Bank of Japan (BoJ) is likely to place greater emphasis on inflation dynamics, with underlying inflation seen as approaching the 2% target [1]. This supports the prospect of further policy normalization. ING expects the BoJ to deliver a 25 basis point rate hike in April, citing the solid business sentiment and inflationary trends as key factors [1].
While the outlook remains cautious and there are sectoral divergences, the overall expansionary readings in the Tankan and PMI surveys reinforce ING's expectation of an imminent rate hike [1]. The BoJ is anticipated to pay closer attention to price components in its policy decisions, especially given the recent rise in oil prices and its impact on inflation [1].
No specific market reactions or analyst opinions beyond ING's forecast are mentioned in the article [1].
CONCLUSION
ING forecasts a 25 basis point rate hike by the Bank of Japan in April, supported by firm business sentiment and inflation approaching the 2% target. The Tankan Survey and Manufacturing PMI both indicate expansion, reinforcing expectations of policy normalization. Market participants may anticipate tighter monetary policy as the BoJ responds to inflationary pressures.