MNI BRIEF: BOJ Ups FY2026 GDP; Largely Keeps Inflation View

The Bank of Japan on Friday largely maintained its inflation forecasts for fiscal 2026 and 2027, but raised its GDP forecast for fiscal 2026 starting April 1 to 1.0% from the 0.7% projected in October, reflecting the impact of government stimulus measures, following the board's decision to hold the policy rate at 0.75%.

The board’s median GDP forecast for fiscal 2027 was revised down to 0.8% from October’s 1.0%, while the projection for the current fiscal year was raised to 0.9% from 0.7%. (See MNI BOJ WATCH: Board To Hold, Raise Growth Projection)

Median forecasts for core and core-core CPI in fiscal 2026 were revised slightly higher to 1.9% and 2.2%, respectively, from October’s 1.8% and 2.0%. 

For fiscal 2027, the board projected core and core-core CPI at 2.0% and 2.1%, compared with October’s 2.0% for both measures.

On risks to the economy and prices, the BOJ said, “Risks to both economic activity and prices are generally balanced.”

The board also maintained that underlying CPI inflation and the rate of increase in the CPI (all items less fresh food) are expected to rise gradually, reaching levels in the second half of the projection period that are broadly consistent with the price stability target.