Japan’s central bank judged underlying inflation broadly consistent with its 2 per cent target in its October outlook. It still sees upward price risks from energy, wages and exchange rates. Growth projections were largely unchanged, while the inflation forecast for the next fiscal year rose somewhat. The bank retained its approach of further rate increases as conditions warrant.
Japan’s central bank judged underlying consumer inflation broadly consistent with its 2 per cent price-stability target in its October outlook. Medium- to long-term expectations were also around 2 per cent. The assessment followed the October policy meeting. Continuing labour shortages have accompanied changes in wage and price setting, with firms passing higher wages into selling prices.[1], [2]
The bank expects inflation excluding fresh food to move clearly above 2 per cent before easing toward that level later in its projection period. Oil, semiconductor costs linked to artificial intelligence demand and the yen’s earlier depreciation are among the pressures. Its fiscal 2027 inflation forecast rose somewhat. Alternative supplies involve transport expenses, so a decline in international oil prices may leave procurement costs elevated.[1]
Growth projections changed little. The bank expects moderate but slower expansion in the current fiscal year as energy and raw-material costs weigh on profits and real household incomes. Government measures and global artificial intelligence demand provide support. Corporate investment is increasing moderately and financial conditions remain accommodative. Activity risks were assessed as balanced and price risks as tilted upward. The bank retained its approach of further rate increases in response to economic, price and financial developments.[1]
