MNI BRIEF: BOJ's FY26 Inflation View Flat; Upside Risk To FY24, 25 Prices
The Bank of Japan board expects the core consumer price index and core-core CPI in fiscal 2026 to rise 1.9% and 2.1%, unchanged from the previous forecast made in April, according to the Bank's latest Outlook Report.
However, the BOJ noted significant upside risk to prices exists in FY2024 and 2025. The board’s forecast for core CPI in FY2025 was revised up to 2.1% from April’s 1.9% and the price view this fiscal year was revised down to 2.4% from 2.8% made in April.
The BOJ noted risks to economic activity were skewed to the upside for fiscal 2025, while risks to prices were skewed to the upside for fiscal 2024 and 2025.
“While it will depend on developments in economic activity and prices as well as financial conditions going forward, given that real interest rates at significantly low levels, if the outlook for economic activity and prices will be realised, the BOJ will continue to raise the policy interest rate and adjust the degree of monetary accommodation.”