Japanese Firms Largely Oppose Further BOJ Rate Hikes, Citing Rising Costs

Majority of Japanese Companies Against Further Rate Increases

Nearly 60% of Japanese companies are opposed to the Bank of Japan (BOJ) implementing further interest rate hikes over the next year, according to a poll conducted by Tokyo Shoko Research Ltd. The survey, whose results were released on Friday, February 13, indicated widespread concern among businesses regarding the potential for increased borrowing costs and financial strain.

The poll, conducted online between January 30 and February 6, gathered 5,170 valid responses. It found that 59.6% of companies believe the central bank should maintain current interest rates, while 23.6% advocated for a rate cut. Only 16.6% expressed a desire for higher rates.

Impact of Recent BOJ Policy on Businesses

The sentiment against further tightening comes after the BOJ raised its policy interest rate to 0.75% in December 2025, marking its highest level since September 1995.

The Tokyo Shoko Research poll highlighted the tangible effects of this previous hike on businesses:

• 52% of surveyed companies reported that their borrowing rates had already increased.
• 57.1% cited lower profitability as an impact.
• 35.4% noted worsening financial conditions.
• 24.8% mentioned a reduction or cancellation of capital investments.

These figures underscore the financial pressures Japanese firms are experiencing, leading to their apprehension about additional rate increases.

Bank of Japan's Stance and Economic Outlook

Despite the concerns from the business sector, the Bank of Japan has signaled its intention to continue on a path of monetary policy normalization. At its January 2026 meeting, the BOJ opted to keep its policy rate unchanged at 0.75%. However, the central bank's 'Outlook for Economic Activity and Prices' report from January 2026 projects moderate economic growth for Japan. The BOJ stated that if this outlook is realized, it will 'continue to raise the policy interest rate and adjust the degree of monetary accommodation' to achieve its 2% price stability target.

Inflation expectations have risen moderately, and the BOJ anticipates that a 'virtuous cycle' of wages and prices will continue to strengthen. However, real wages for Japanese workers declined throughout 2025, indicating that nominal pay growth has not kept pace with consumer inflation, a key factor the BOJ monitors for sustained economic recovery.

Corporate Resilience Amidst Rising Rates

While many companies express concern, some analyses suggest that corporate Japan may be able to withstand rising interest rates. A February 2026 S&P Global report indicated that for many large Japanese companies, rising interest rates would depress earnings within manageable limits. The median interest rate paid by Nikkei 225 constituents in fiscal year 2024 was 1.4%, significantly lower than the 3.8% paid by S&P 500 constituents in the U.S.

However, the report also cautioned that debt-dependent industries and companies with high leverage could see their performance and financial conditions deteriorate, potentially increasing pressure on their creditworthiness.