Japan Bank Lending Remains at Strongest Level Since March 2021

Japan's bank lending rose 5.7% year over year in June, matching May's pace and remaining at its strongest level since March 2021, according to preliminary data released by the Bank of Japan on Wednesday. The reading came in slightly below the consensus forecast of a 5.8% increase tracked by Investing.com. Outstanding loans at major, regional, and shinkin banks reached 676.1 trillion yen in June, up from 670.8 trillion yen in May. Lending by major and regional banks accelerated to 6.3% from 6.2%. Loans at major banks increased 8.7% from 8.6%, while lending by regional banks edged up to 4.3% from 4.2%. Lending by shinkin banks, which primarily serve small businesses and local communities, was unchanged at 1.7% from a year earlier. The BOJ raised its policy rate to 1% earlier in June, the highest level since 1995. Even after the increase, Japan's borrowing costs remain well below those in other major economies. The continued strength in lending points to resilient demand for credit despite higher interest rates, supporting the view that the economy can withstand further policy normalization. That is in line with the BOJ's latest Tankan survey, which showed an improvement in.