MNI BRIEF: BOJ Keeps Econ View; CPI To Be Sluggish

The Bank of Japan on Friday maintained its cautious view on the economy and largely left unchanged its assessments of major components, including private consumption, capital investment and exports, following the Board's decision to hike the policy rate 25 basis points to 0.75%.

The BOJ also kept its cautious outlook for inflation. “The year-on-year rate of increase in the CPI (all items less fresh food) is likely to decelerate to a level below 2% through the first half of fiscal 2026, with the waning of the effects of the rise in food prices, such as rice prices, and partly due to the effects of government measures to address rising prices,” the BOJ said.

“Thereafter, since it is projected that a sense of labor shortage will grow as the economic growth rate rises and that medium- to long-term inflation expectations will rise, it is expected that underlying CPI inflation and the rate of increase in the CPI (all items less fresh food) will increase gradually and, in the second half of the projection period, will be at a level that is generally consistent with the price stability target."

The BOJ also said, "It is highly likely that the mechanism in which both wage and prices rise moderately will be maintained."