MNI BRIEF: BOJ Ups FY22 CPI View To +2.3%, Cuts GDP To +2.4%

The Bank of Japan board on Thursday upgraded its forecast for the core consumer price index this fiscal year to +2.3% from +1.9%, but lowered real economic growth forecast to +2.4% from +2.9%, the BOJ’s Outlook Report released on Thursday showed.

The board’s median forecasts for inflation rate and real GDP in fiscal 2023 were +1.4% and +2.0%, revised from +1.1% and +1.9% made in April, respectively. The higher inflation view this fiscal year is due mainly to the impact of the yen’s fall, the rise in commodity prices and corporate cost pass-through.

The core CPI is expected to rise above the 2% that the BOJ is targeting but it is still far from the achievement of the 2% price target in a stable and sustainable manner, prompting the BOJ to maintain an easing bias of monetary policy.

The median forecasts for GDP and the inflation rate in fiscal 2024 were revised to +1.3% and +1.3% from +1.1% and +1.1%, respectively. The BOJ tweaked its assessment of inflation expectations in the wake of the recent rise in medium- to long-term inflation expectations. The bank simply said, "Inflation expectations have risen." The previous view was "inflation expectations, particularly short-ones, have risen."