Corporate bond issuance in Japan is poised to breach a record this year on growing funding demand for mergers and acquisitions as the economy continues to move away from three decades of deflation, Bloomberg News reported. The appetite for funds is outweighing concerns about the Middle East conflict after the U.S. and Iran failed to reach an agreement as the war enters its seventh week. Yen bond issuance in Japan has been unfazed, with sales rising 94% in March on a year earlier. That’s more than four times faster than all global corporate debt combined, according to compiled data.

The International Monetary Fund said on Tuesday it expected the Bank of Japan to raise interest rates gradually, but at a ​slightly faster pace than projected six months ago, Reuters reported. After Japan's economy expanded ‌1.2% in 2025, growth is projected to slow to 0.7% in 2026 and 0.6% in 2027, the IMF said in its World Economic Outlook report, roughly unchanged from its ​forecasts in October. The effect of the government's fiscal stimulus package and ​steps to curb fuel bills will offset headwinds from weaker overseas ⁠demand and the Middle East conflict, the report said.

Bank of Japan (BOJ) monetary policy could be an option to tame rising prices by boosting the yen, Japan’s trade minister said yesterday, as the central bank weighs raising interest rates this month to counter inflation spurred by the Iran war, Reuters reported. Ryosei Akazawa, Japan’s top trade negotiator and Minister of Economy, Trade and Industry, was responding to an economist’s suggestion on a television talk show that a stronger yen would help offset higher crude-oil import costs.

Japanese Finance Minister Satsuki Katayama said on Friday private credit does not ​pose a major issue domestically at present but noted ‌risks linked to the $2 trillion industry could be discussed at next week's G7 finance meeting, Reuters reported. "Japan's exposure to the private credit market is not ​particularly large. It's not that there is no investment ​at all, but we do not view this ⁠as a major issue domestically at this point," she said ​at a regular press conference.

Japan's financial regulator has been ‌conducting checks on private credit exposure at major financial institutions, a source told Reuters on Thursday, as concerns mount over strains in the $2 trillion global private credit industry. The ​Financial Services Agency (FSA) is examining lending and investment ties to ​private credit, the source familiar with the matter said, declining ⁠to be identified as the matter is private. The move was ​first reported by Kyodo News.

The Japanese business mood worsened in March to levels not seen since the start of the Ukraine war in 2022, a government survey showed, a sign surging oil costs and supply disruptions from the Middle East war were taking a toll on the fragile economy, Reuters reported. A separate survey by a private think tank also showed corporate bankruptcy cases rose for the fourth straight year in fiscal 2025 with further increases expected from around summer as surging costs from the conflict squeeze profits.

Japan’s households reduced spending for a third straight month even after real wages turned positive, underscoring the fragile state of domestic demand, Bloomberg News reported. Outlays by households adjusted for inflation fell 1.8% in February from a year earlier, a faster decline compared with January’s 1% retreat, the internal affairs ministry reported Tuesday. The weak year-on-year data underscore the challenges for Prime Minister Sanae Takaichi as she attempts to buoy domestic demand with fiscal steps meant to soften the blow from rising prices.

The International Monetary Fund urged the ‌Bank of Japan to continue raising interest rates, even as the Middle East war posed "significant new risks" to the country's economic outlook, Reuters reported. The proposal comes amid market expectations the BOJ will raise interest rates as soon as April in the face of ​mounting inflationary pressure from the conflict-induced spike in oil prices, and higher import costs blamed on ​the weak yen.

The Bank of Japan will keep raising interest rates if its economic forecasts hold, ‌a senior central bank official said, reinforcing a tightening bias even as fresh surveys show firms feeling the pinch of rising fuel costs linked to the Iran war, Reuters reported. While higher oil prices pose risks to economic growth, they could also push up underlying inflation by raising long-term inflation expectations, said Koji Nakamura, the BOJ's executive director overseeing monetary policy, ​in parliament on Friday.

The Financial Services Agency plans to conditionally ease capital adequacy regulations for banks to encourage investment in companies. The plan is to reduce capital buffers against loss risks while still maintaining fiscal soundness, informed sources said on Friday, the Japan Times reported. By revitalizing the supply of funds, the FSA aims to promote industrial reorganization and support startups and midsize companies in rural areas.