Short-term surveys show that confidence among large Japanese manufacturers continues to improve, supporting the stance of the Bank of Japan to raise interest rates.

Despite the outbreak of wars in the Middle East, confidence among Japan's large manufacturers has improved for the fourth consecutive quarter, supporting the Bank of Japan's policy stance to continue raising interest rates. The Tankan survey released by the Bank of Japan on Wednesday showed that the confidence index for large manufacturers rose to 17 in March, revised from 16 in the previous quarter. The median forecast among economists was 16. The confidence index for large non-manufacturers remained at 36 after the data revision from the previous quarter, still close to its strongest level since 1991. The positive index indicates that there are more companies that believe the business environment is "favorable" than those that think it is "unfavorable." However, large companies have shown a slight weakening in their outlook. The outlook index for large manufacturers decreased slightly to 14, while the outlook index for large non-manufacturers dropped from the revised 31 to 29. As one of the Bank of Japan's most closely watched indicators, the Tankan survey currently shows that overall confidence among Japanese companies remains stable. Once the impact of the Iran war becomes clearer, if the Bank of Japan chooses to raise interest rates as early as this month, the Tankan survey will be one of the supporting factors. Traders currently estimate the probability of the Bank of Japan raising interest rates this month to be around 69%.