MNI BRIEF: BOJ Sees Risks To Prices In FY25, FY26 Balanced

The Bank of Japan board predicted the core consumer price index and core-core CPI in fiscal 2026 will rise 1.9% and 2.1%, indicating the probability of achieving the 2% target will increase.

The BOJ board’s forecast for core CPI in fiscal 2025 was revised up to 1.9% from January’s 1.8% and the price view this fiscal year was revised up to 2.8% from January's 2.4%.

"With regard to the risk balance, risks to economic activity are generally balanced for fiscal 2024 onward," the BOJ noted. "Risks to prices are skewed to the upside for fiscal 2024 but are generally balanced thereafter."

The view indicated that the BOJ will not need to raise the policy interest rate rapidly, although the inflation rate will be revised up this fiscal year. But the Bank does not judge the upside risks to prices have increased.

MNI reported this week that BOJ officials believe the weak yen will drive stronger inflation over the northern summer. (See MNI POLICY: BOJ Sees Risk of Earlier Inflation Rebound) The board held its monetary policy steady today. (See MNI BOJ WATCH: Board To Consider Hold, Higher CPI View)