By Leika Kihara
TOKYO, Dec 15 (Reuters) - Big Japanese manufacturers' business sentiment hit a four-year high in the three months to December, a closely watched central bank survey showed on Monday, suggesting
the economy was weathering the hit from higher U.S. tariffs.
The outcome reinforces market expectations the Bank of Japan (BOJ) will raise interest rates at its two-day policy meeting ending on Friday.
The headline index measuring big manufacturers' business confidence stood at +15 in December, the "tankan" survey showed, up from +14 in September and matching a median market forecast.
The reading, which marked the third straight quarter of improvement, was the highest since December 2021.
An index gauging big non-manufacturers' sentiment stood at +34 in December, unchanged from the September reading. It compared with a median market forecast for a reading of +35.
Big companies expect to increase capital expenditure by 12.6% in the current fiscal year ending in March 2026, the tankan showed, compared with a median market forecast for a 12% rise.
Japan's economy shrank in the three months to September as exports fell in the face of U.S. tariffs. But analysts expect growth to rebound in the current quarter, as exports and factory output show signs of recovery.
With inflation exceeding its 2% target for well over three years and price rises broadening, the BOJ is widely expected to keep interest rates to 0.75% from 0.5% this week.
(Reporting by Leika Kihara; Editing by Sam Holmes)
