MNI BRIEF: BOJ See FY25 Key CPI At 1.9%, Upside Risks
MNI (TOKYO) - The Bank of Japan board maintained its prediction for the core-core inflation rate in fiscal 2025 and 2026 at 1.9% and 2.1%, unchanged from July’s forecasts, but revised up its outlook for this fiscal year 2.0% from July’s 1.9%.
The BOJ board’s forecast for core CPI this fiscal year was unrevised at 2.5%, but the price view in fiscal 2025 was lowered to 1.9% from July’s 2.1%. The board left the FY2026 view at 1.9%.
Risks to economic activity are generally balanced, but risks to prices are skewered to the upside for fiscal 2025, the board noted.
The BOJ also repeated that exchange rate developments, compared to the past, are more likely to affect prices. (See MNI POLICY: Weaker Yen Ups Dec Hike Chances But US Vote A Risk)
The board’s median GDP forecasts were largely unchanged from July’s view at 0.6% this fiscal year, 1.1% in FY2025 and 1.0% in FY2026 vs. 1.0% and 1.0% made in July.
Bank officials are focused on the degree of wage hikes at major firms to be available in or after January and their impact on smaller firms.