Bank of Japan Sees Inflation Risks Tilted to Upside in October Outlook

MT Newswires Live10-30

The Bank of Japan expects consumer price inflation excluding fresh food to accelerate to clearly above its 2% target in the first half of the projection period, before easing toward around 2% in the second half, according to its October 2026 Outlook Report.

The central bank attributed the near-term acceleration to higher crude oil and semiconductor prices and yen depreciation, while the subsequent moderation is expected to reflect the waning effects of elevated crude oil prices.

The BOJ projected inflation excluding fresh food at 2.5% in fiscal 2026, 2.6% in fiscal 2027 and 2% in fiscal 2028.

The fiscal 2027 forecast was revised up by 0.2 percentage points from July, while the other projections were unchanged.

Meanwhile, the central bank forecast economic growth of 0.7% in both fiscal 2026 and 2027, followed by 0.8% in fiscal 2028.

It assessed risks to economic activity as generally balanced, but those to prices as skewed to the upside, citing the Middle East situation, AI-related demand, and foreign exchange developments.

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