Moody’s economist warns weak demand and global tensions may slow BOJ rate path

Speaking to CNBC’s Squawk Box Asia on April 1, 2026, Stefan Angrick, senior economist at Moody’s Analytics, said resilient business sentiment and strong corporate profits continue to support Japan’s economic backdrop, but warned that weak domestic demand, uneven wage growth, and rising geopolitical tensions could complicate the path toward further interest rate hikes.

Click the screen-grab above or click here to watch the segment on CNBC’s website.

Key Topics Covered

• Japan’s latest Tankan survey shows resilient business sentiment, with manufacturing confidence holding up despite global shocks and geopolitical tensions.

• Corporate profits remain strong, helping sustain business optimism even as domestic demand across the broader economy stays weak.

• Middle East tensions and rising oil risks are complicating Japan’s policy outlook, adding fresh uncertainty to the BOJ’s rate path.

• Energy-driven inflation underscores the limits of monetary policy, as interest rate hikes cannot offset supply shocks from geopolitical conflict.

• Japan’s Shunto wage negotiations delivered headline increases above 5%, continuing the recent cycle of strong pay settlements at major firms.

• Yet those wage gains are not spreading across the broader economy, limiting the expected boost to domestic consumption.

• Small and medium-sized enterprises face the greatest pressure, squeezed by rising costs and weaker domestic demand.

• Because SMEs employ the majority of Japan’s workforce, their ability to raise wages will heavily influence the strength of Japan’s recovery.