Japanese business sentiment falls to one-year low on trade uncertainty

According to the country's central bank, business sentiment among Japan's major manufacturers, calculated over three winter months, reached its lowest level in the past year. This points to a negative impact of trade tensions on the country's export-dependent economy.

The regulator's survey also showed that companies in the service sector expect business conditions to remain flat or worsen over the next three months. As noted by Reuters, the survey was conducted before the US president announced his intention to impose duties on automobile imports. This adds complexity to the Bank of Japan's interest rate decisions.

However, business sentiment among large non-manufacturing firms improved significantly, hitting a record high since 1991. These firms plan to increase capital spending by 3.1% in the current fiscal year.

A growing number of firms have noted an increase in product prices. They expect inflation in Japan to average 2.4% over the next three years. According to Reuters experts, this may be the basis for further interest rate hikes by the country's financial regulator.