The Bank of Japan has more room to postpone policy tightening after the September Tankan survey showed diverging sentiment across different business sectors. Reuters reports that the central bank faces a less urgent timeline for interest rate increases because fragmented confidence data suggests a non-uniform economic recovery, despite some areas showing strength.

Large manufacturer sentiment reached an 8 year high of 24, but the non-manufacturing index dipped to 35 from 37. Other signs of softening included a decline in all-industry capital expenditure plans to 11.3% from 11.5% and a production capacity index fall to -2 from 0. Nonetheless, Japanese firms expect inflation to average 2.6% over the next 3 years, remaining above the BoJ 2% target.