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Tue, Aug 07, 2007 - Page 10 News List

Japanese business chiefs not worried over interest raise

AFP , TOKYO

A majority of large Japanese firms believe that their business can easily withstand another interest rate rise, a survey released yesterday said.

Fifty-six percent of top executives at 136 major Japanese companies said "there won't be any big impact" if the Bank of Japan raises its key interest rate, said the poll conducted by the Nikkei Shimbun last month.

Forty-six percent said they would face higher interest payments but the financial standing of their firms would not change if the central bank raises rates.

firm recovery

Some analysts believe that the bank will raise interest rates as soon as late this month after recent economic indicators showed the world's second-largest economy is on a firm recovery track.

However, recent sharp falls in global share prices and political uncertainties after the Japanese government's upper house election defeat last month have cast some doubt on the prospects of another rate rise just yet.

The bank has left its key lending rate unchanged at 0.5 percent since February, sticking to its stance of tightening monetary policy only gradually after last year's end to zero rates.

continued recovery

The Nikkei survey also showed that 54 percent of respondents expect Japan's economic recovery, which is already the longest in post-war times, to continue for at least another year, up from 44 percent in a similar poll in April.

The survey received replies late last month from presidents and chairpersons at major Japanese companies including Sony, Toyota Motor, Matsushita Electric Industrial, Japan Airlines, Mitsubishi, Mizuho Financial, Toshiba and Hitachi.

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