A quarterly survey of major Japanese manufacturers released Monday shows business sentiment improving to its best level in four years, even after President Trump raised tariffs on goods from the U.S. ally to a baseline level of 15%.
The Bank of Japan is bound to take the results of its quarterly “tankan” survey into account during a policy meeting this week, when it is expected to raise its benchmark interest rate. Analysts said the stronger results may sway the BOJ toward pressing ahead with a 0.25 percentage point rate hike that will take the key rate to 0.75%.
That expectation hit the price of bitcoin early Monday, as it dipped below $88,000 from about $92,000. Higher rates would likely lead Japanese investors to shift funds back home, sapping demand for cryptocurrencies.
While the U.S. Federal Reserve has been trimming rates to counter a weak jobs market, Japan’s central bank is moving in the other direction as it contends with inflation and a weak currency. The economy contracted at an annualized rate of 2.3% in July-September.
Still, the BOJ survey showed the measure of major manufacturers expressing optimism rose to 15 from 14 in the last quarter, the highest level in four years. The index shows the percentage of companies reporting positive conditions minus the percentage reporting unfavorable ones.
The measure of sentiment for all companies rose to 17 from 15, it said.
The survey “struck all the right notes from the Bank of Japan's perspective,” Abhijit Surya of Capital Economics said in a report. “It showed that business conditions are improving, profit margins remain elevated and firms are upbeat about their investment intentions.”
The latest deal between Japan and the Trump administration set tariffs on its exports to the U.S. at 15%, down from an earlier plan for a 25% tariff. To win the agreement, among other things Japan promised to invest $550 billion in the United States.
While the BOJ's overall survey showed improvement, forecasts for the next quarter were less positive, and businesses expected inflation to remain at 2.4%, above the central bank's target range.
The Bank of Japan has kept its key interest rate near or below zero for years, trying to spur faster economic growth by keeping borrowing costs very low.
Its policymaking has been complicated by the fact that Japan's population is shrinking and aging rapidly. That has caused labor shortages that have only slowly pushed wages higher. That should lead consumers to spend more, but increases in income have lagged behind inflation, denting their appetite for spending.
Prime Minister Sanae Takaichi has pledged, as have her predecessors, to revive the economy. Last month, her cabinet approved a 21.3 trillion yen ($135.4 billion) stimulus package to spur growth through expansionary government spending and relieve the impact of higher prices.
A general view of a container port seen from a helicopter in Tokyo, on Oct. 29, 2025. (AP Photo/Mark Schiefelbein)
FILE - A Japanese flag flutters at the Bank of Japan headquarters in Tokyo on July 29, 2022. (AP Photo/Shuji Kajiyama, File)
BEIRUT (AP) — Qassim Hamadeh woke to the sounds of gunfire and explosions in his village of Beit Jin in southwestern Syria last month. Within hours, he had lost two sons, a daughter-in-law and his 4-year-old and 10-year-old grandsons. The five were among 13 villagers killed that day by Israeli forces.
Israeli troops had raided the village — not for the first time — seeking to capture, as they said, members of a militant group planning attacks into Israel. Israel said militants opened fire at the troops, wounding six, and that troops returned fire and brought in air support.
Hamadeh, like others in Beit Jin, dismissed Israel’s claims of militants operating in the village. The residents said armed villagers confronted Israeli soldiers they saw as invaders, only to be met with Israeli tank and artillery fire, followed by a drone strike. The government in Damascus called it a “massacre.”
The raid and similar recent Israeli actions inside Syria have increased tensions, frustrated locals and also scuttled chances — despite U.S. pressure — of any imminent thaw in relations between the two neighbors.
An Israeli-Syrian rapprochement seemed possible last December, after Sunni Islamist-led rebels overthrew autocratic Syrian President Bashar Assad, a close ally of Iran, Israel’s archenemy.
Syria’s interim president, Ahmad al-Sharaa, who led the rebels who took over the country, said he has no desire for a conflict with Israel. But Israel was suspicious, mistrusting al-Sharaa because of his militant past and his group’s history of aligning with al-Qaida.
Israeli forces quickly moved to impose a new reality on the ground. They mobilized into the U.N.-mandated buffer zone in southern Syria next to the Golan Heights, which Israel captured from Syria during the 1967 Mideast war and later annexed — a move not recognized by most of the international community.
Israeli forces erected checkpoints and military installations, including on a hilltop that overlooks wide swaths of Syria. They set up landing pads on strategic Mt. Hermon nearby. Israeli reconnaissance drones frequently fly over surrounding Syrian towns, with residents often sighting Israeli tanks and Humvee vehicles patrolling those areas.
Israel has said its presence is temporary to clear out pro-Assad remnants and militants — to protect Israel from attacks. But it has given no indication its forces would leave anytime soon. Talks between the two countries to reach a security agreement have so far yielded no result.
The events in neighboring Lebanon, which shares a border with both Israel and Syria, and the two-year war in Gaza between Israel and the militant Palestinian group Hamas have also raised concerns among Syrians that Israel plans a permanent land grab in southern Syria.
Israeli forces still have a presence in southern Lebanon, over a year since a U.S.-brokered ceasefire halted the latest Israel-Hezbollah war. That war began a day after Hamas attacked southern Israel on Oct. 7, 2023, with Hezbollah firing rockets into Israel in solidarity with its ally Hamas.
Israel’s operations in Lebanon, which included bombardment across the tiny country and a ground incursion last year, have severely weakened Hezbollah.
Today, Israel still controls five hilltop points in southern Lebanon, launches near-daily airstrikes against alleged Hezbollah targets and flies reconnaissance drones over the country, sometimes also carrying out overnight ground incursions.
In Gaza, where U.S. President Donald Trump’s 20-point ceasefire deal has brought about a truce between Israel and Hamas, similar buffer zones under Israeli control are planned even after Israel eventually withdraws from the more than half of the territory it still controls.
At a meeting of regional leaders and international figures earlier this month in Doha, Qatar, al-Sharaa accused Israel of using imagined threats to justify aggressive actions.
“All countries support an Israeli withdrawal" from Syria to the lines prior to Assad's ouster, he said, adding that it was the only way for both Syria and Israel to "emerge in a state of safety.”
The new leadership in Damascus has had a multitude of challenges since ousting Assad.
Al-Sharaa's government has been unable to implement a deal with local Kurdish-led authorities in northeast Syria, and large areas of southern Sweida province are now under a de facto administration led by the Druze religious minority, following sectarian clashes there in mid-July with local Bedouin clans.
Syrian government forces intervened, effectively siding with the Bedouins. Hundreds of civilians, mostly Druze, were killed, many by government fighters. Over half of the roughly 1 million Druze worldwide live in Syria. Most other Druze live in Lebanon and Israel, including in the Golan Heights.
Israel, which has cast itself as a defender of the Druze, though many of them in Syria are critical of its intentions, has also made overtures to Kurds in Syria.
“The Israelis here are pursuing a very dangerous strategy,” said Michael Young, Senior Editor at the Beirut-based Malcolm H. Kerr Carnegie Middle East Center.
It contradicts, he added, the positions of Saudi Arabia, Turkey, Egypt — and even the United States — which are "all in agreement that what has to come out of this today is a Syrian state that is unified and fairly strong,” he added.
In a video released from his office after visiting Israeli troops wounded in Beit Jin, barely 5 kilometers (3 miles) from the edge of the U.N. buffer zone, Israeli Prime Minister Benjamin Netanyahu said Israel seeks a “demilitarized buffer zone from Damascus to the (U.N.) buffer zone,” including Mt. Hermon.
“It is also possible to reach an agreement with the Syrians, but we will stand by our principles in any case,” Netanyahu said.
His strategy has proven to be largely unpopular with the international community, including with Washington, which has backed al-Sharaa’s efforts to consolidate his control across Syria.
Israel’s operations in southern Syria have drawn rare public criticism from Trump, who has taken al-Sharaa, once on Washington's terror list, under his wing.
“It is very important that Israel maintain a strong and true dialogue with Syria, and that nothing takes place that will interfere with Syria’s evolution into a prosperous State,” Trump said in a post on Truth Social after the Beit Jin clashes.
Syria is also expected to be on the agenda when Netanyahu visits the U.S. and meets with Trump later this month.
Experts doubt Israel will withdraw from Syria anytime soon — and the new government in Damascus has little leverage or power against Israel's much stronger military.
“If you set up landing pads, then you are not here for short-term,” Issam al-Reiss, a military adviser with the Syrian research group ETANA, said of Israeli actions.
Hamadeh, the laborer from Beit Jin, said he can “no longer bear the situation” after losing five of his family.
Israel, he said, “strikes wherever it wants, it destroys whatever it wants, and kills whoever it wants, and no one holds it accountable.”
Associated Press writer Omar Albam in Beit Jin, Syria, contributed to this report.
FILE - A Lebanese army soldier looks at the Israeli military post of Hanita from the Alma al-Shaab border village with Israel, south Lebanon, southern Lebanon, Nov. 28, 2025. (AP Photo/Bilal Hussein, File)
Local residents gather to welcome a delegation showing support after Israeli troops raided the village on Nov. 28, in Beit Jin, southwestern Syria, Monday, Dec. 1, 2025. (AP Photo/Omar Albam)
FILE - A man waves an Israeli flag over a picture of Sheikh Mowafak Tarif, the spiritual leader of the Druze in Israel, during a weekly rally in Sweida, southern Syria, on Sept. 20, 2025. (AP Photo/Fahd Kiwan, File)
FILE - Israeli soldiers cross the security fence moving towards the so-called Alpha Line that separates the Israeli-annexed Golan Heights from Syria, in the town of Majdal Shams, Dec. 15, 2024. (AP Photo/Matias Delacroix, File)
Qassim Hamadeh, who lost two sons, a daughter-in-law, and his 4- and 10-year-old grandsons, among 13 villagers killed when Israeli troops raided Beit Jin, southwestern Syria, on Nov. 2, looks at the damage from the raid alongside one surviving grandson, Dec. 1, 2025. (AP Photo/Omar Albam)
