Survey: Nearly half of Japanese companies believe that the central bank's interest rate hike is having a negative impact.

According to a Reuters survey released on Thursday, nearly half of Japanese companies are being negatively impacted by the Bank of Japan's interest rate hike, as rising borrowing costs have eroded profits and hindered capital investment. The Bank of Japan ended its negative interest rate policy in 2024, raising its short-term policy rate from 0.75% to 1.0% in June, marking a 31-year high. The Bank of Japan also stated that it is prepared to further tighten monetary policy to alleviate inflation pressure caused by energy shocks from the Middle East conflict. Approximately 5% of surveyed companies reported significant negative impacts on their operations from the interest rate hike, 44% reported some level of negative impact, and 46% reported no impact. The remaining 5% indicated that the rise in interest rates had a positive impact on their business to some extent. "Compared to last year, interest burdens have increased significantly. If interest rates rise further, it will have a substantial impact on the company," wrote the head of a mechanical manufacturing company in the survey. When asked about the ideal timing for further rate hikes, 12% of surveyed companies chose the current quarter of July-September, 27% chose the fourth quarter, 27% chose the first half of 2027, and 26% indicated they do not want any rate hikes at all. The Bank of Japan's next policy meeting is scheduled for July 30-31.