MNI BRIEF: BOJ Sees FY25 CPI at 2.2%, Delays 2% Target Timing

The Bank of Japan on Thursday lowered its median forecasts for economic growth in fiscal 2025 and 2026 to 0.5% and 0.7%, down from 1.1% and 1.0% projected in January, due to the growing impact of U.S. trade policies on Japan’s economy. 

For fiscal 2027, the BOJ projected growth at 1.0%, marking its first forecast for that year.

The central bank also cut its core consumer price index forecasts, projecting 2.2% inflation this fiscal year and 1.7% in fiscal 2026, down from 2.4% and 2.0%. Core CPI for fiscal 2027 is forecast at 1.9%.

The BOJ warned that risks to both economic activity and prices are tilted to the downside for fiscal 2025 and 2026. 

It also delayed its timeline for achieving the 2% inflation target, now expecting underlying CPI to align with the target in the second half of the projection period to March 2028, a year later than previously estimated. (See MNI POLICY: BOJ Growth Cut Will Not Close Door on Hikes)