BOJ Survey: Corporate Financing Demand Still Expanding After Rate Hikes
nashnova research
The Bank of Japan's latest survey shows corporate funding demand rebounded even after consecutive rate hikes, with the diffusion index rising from -1 to +3 — financial conditions have not meaningfully tightened, leaving the door open for the next move.
What did the survey find?
The survey ran from September 9 to October 13, tracking changes in corporate funding demand as observed by Japan's major banks.
The key metric is a diffusion index — the number of banks reporting "rising demand" minus those reporting "falling demand." It came in at +3, up from -1 three months earlier.
In plain terms = more banks see companies wanting to borrow more, not less.
How far has the BOJ raised rates?
On September 18, the BOJ lifted its policy rate to 1.25%, the highest in nearly 31 years.
This means → Japan has exited decades of ultra-low rates, yet corporate borrowing demand is still expanding — rates have not yet hit the level that acts as a brake.
The BOJ also signaled a policy pivot: the priority now is guarding against inflation overshooting its 2% target.
What does this mean for the next hike?
The BOJ said it will closely assess how past hikes have actually affected corporate financing, to gauge how far current rates sit from the neutral rate — the level that neither stimulates nor restrains the economy.
This means → the survey showing still-loose financial conditions effectively gives the BOJ room to keep hiking.
In plain terms = companies are still borrowing eagerly, so rates are not yet "painful" enough — this data gives the BOJ no reason to pause.
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