TOKYO (Reuters) – Japanese big manufacturers’ sentiment improved slightly in the three months to December, a quarterly survey showed on Friday, boding well for the central bank’s plans to gradually raise interest rates from near-zero levels.

The data comes ahead of the Bank of Japan’s two-day policy meeting next week, when the board will debate whether to lift rates from the current 0.25%.

The headline index measuring big manufacturers’ business confidence stood at +14 in December, up from +13 hit three months ago and marking the highest reading since March 2022, the BOJ’s “tankan” quarterly survey showed on Friday. It compared with a median market forecast for +12.

An index gauging big manufacturers’ sentiment declined slightly to +33 from +34 in September, compared with a median market forecast for a reading of +32.

Big manufacturers and non-manufacturers expect conditions to worsen in the three months ahead, the survey showed.

Big companies expect to increase capital expenditure by 11.3% in the fiscal year ending in March, compared with a 10.6% gain projected in the previous survey in September. The increase was bigger than market forecasts for a 9.6% rise.

The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards sustainably achieving its 2% inflation target.

BOJ Governor Kazuo Ueda has said the central bank will continue to raise rates if companies keep hiking prices and wages due to optimism over the outlook, and help keep inflation durably around its 2% target.

The tankan’s sentiment diffusion indexes are derived by subtracting the number of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.