MNI BRIEF: FY25 Core-Core CPI 1.9%, 2% In Sight - BOJ Outlook

While the Bank of Japan board does not believe Japan's economy will achieve the 2% price target over its March 2026 projection period, its latest forecasts show the target may become apparent in April, the BOJ's Outlook Report showed on Tuesday.

The board revised its median forecast for core CPI in fiscal 2025 to 1.7% from July’s 1.6% and increased its median forecast for core-core CPI to 1.9% from July’s 1.8%.

However, the predictions remain below the bank’s 2% target, reflecting the desire of policymaker not to send a message to markets that the BOJ may soon exit its easy policy.

The focus now shifts to the next two Outlook Reports, due January and April, when the Bank will update its inflation forecast. The board revised its median forecast for core CPI this fiscal year to 2.8% from July’s 2.5% and upped its fiscal 2024 view to 2.8% from July’s 1.9%.

The BOJ noted risks to economic activity were generally balanced for FY23 and FY24, but were skewed to the downside for FY25. “Risks to prices are skewed to the upside for fiscal 2023,” the bank noted. It did not comment on FY24 and FY25 price risks.