BOJ retains view on all 9 regional economies, despite Middle East conflict
TOKYO (Kyodo) -- The Bank of Japan on Monday maintained its assessments for all of the country's nine regions despite noting that the Middle East conflict and surges in crude oil prices have led to rises in raw material and energy costs, stoking worries about the outlook.
In the quarterly Sakura report, the central bank said that although some weakness was seen in places, all areas were either "recovering moderately," "picking up," or "picking up moderately" on the back of robust global demand for artificial intelligence-related products and services. The assessments were the same as those used in January.
The report is among materials that the BOJ will scrutinize at its next policy-setting meeting later this month. Views are growing in the market that the bank could raise the key policy rate to address the risk of acceleration in inflation due to the rises in crude oil prices amid the weak yen.
Citing views from a meeting of its regional branch managers earlier Monday, the central bank said the Middle East situation has led to adjustments in output by some businesses. It also noted worries about the reduced procurement of raw materials potentially hitting entire supply chains.
On wage hikes, which the BOJ views as key to deciding whether to raise interest rates, the bank said that both large and small and medium-sized companies have shown intentions to offer high levels of pay hikes for the fiscal year starting April on par with the previous year to secure labor.
The nine regions include the Tokyo area, Tokai where Toyota Motor Corp. is headquartered, and the Kinki region, which includes Osaka and Kyoto.
The BOJ's Tankan survey for March also showed that confidence among big manufacturers had improved for the fourth straight quarter, even as concerns were raised about the impact of the Middle East situation going forward.
The BOJ raised its key interest rate to a 30-year high of 0.75 percent in December and left it unchanged in March as it gauges the impact of the U.S.-Israeli war against Iran on Japan's economy and inflation.
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