A Reuters survey released on Thursday indicates that close to half of Japanese companies are experiencing adverse effects from the Bank of Japan's interest rate increases, with rising borrowing costs cutting into profits and dampening capital investment.
The Bank of Japan concluded its negative interest rate policy in 2024 and raised its short-term policy rate from 0.75% to 1.0% in June, marking the highest level in 31 years.
The central bank has also signaled its readiness to implement further monetary tightening to counteract inflationary pressures stemming from energy shocks related to Middle East conflicts.
Approximately 5% of the surveyed companies reported that the BOJ's rate hikes have had a "significant" negative impact on their operations, while 44% noted some degree of negative effect. In contrast, 46% stated they have felt no impact.
The remaining 5% indicated that the rising interest rates have had a somewhat positive influence on their business.
"Compared to last year, the interest burden has increased sharply. If rates are raised further, it will have a significant impact on the company," wrote a manager from a machinery manufacturer in the survey.
When asked about the ideal timing for subsequent rate hikes, 12% of the firms selected the current July-September quarter, 27% chose the fourth quarter, and 27% opted for the first half of 2027. Meanwhile, 26% expressed a preference for no further rate hikes at any point.
The Bank of Japan's next policy meeting is scheduled for July 30-31.
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