Bank of Japan Reports Rise in Corporate Loan Demand

The Bank of Japan reported that the corporate loan-demand diffusion index rose to +3 percentage points in its October survey, an increase from -1 in the previous period. The survey, conducted between September 9 and October 13 among 50 large banks, revealed that 10% of respondents observed moderate strengthening in corporate demand, while 86% reported no change.

Household loan demand also increased to +5, although demand from local governments fell to -4. These trends follow a September 18 decision by the Bank of Japan Policy Board to guide the uncollateralized overnight call rate to approximately 1.25%.

Despite the rate hike, the central bank stated that financing conditions are expected to remain accommodative. The bank noted that real interest rates remain low even as the demand for funds increases.