BOJ to Project Inflation of about 2 Pct for FY 2026

Tokyo, April 10 (Jiji Press)--The Bank of Japan will project in an upcoming quarterly report a rise of about 2 pct in the core consumer price index for fiscal 2026, it was learned Wednesday. 

The central bank is increasingly confident that a virtuous cycle of rising wages and prices will further strengthen amid mounting pressure for wage hikes amid labor shortages. The BOJ will release its next Outlook for Economic Activity and Prices report April 26.
 

In its previous report, released in January, the BOJ said that the core CPI, excluding fresh food prices, is forecast to increase 2.4 pct in fiscal 2024 and 1.8 pct in fiscal 2025.
 

For the upcoming report, the BOJ will discuss raising its fiscal 2024 projection, because crude oil prices are expected to rise amid growing tensions in the Middle East and a weaker yen is likely to push up import prices for raw materials.
 

The BOJ's core CPI projection for fiscal 2026 will be based on changes in wages and price-setting behavior at companies as well as a shift in the mindset of people who believed that salaries and prices would not rise.
 

In its monetary policy meeting in March, the BOJ concluded that achieving its inflation target of 2 pct in a sustainable and stable way was within sight. The bank began a process of normalizing its monetary policy including by lifting the negative interest rate policy, a move that marked the bank's first interest rate hike in 17 years.
 

"The underlying inflation rate excluding temporary fluctuations is still slightly below 2 pct," BOJ Governor Kazuo Ueda told the Financial Affairs Committee of the House of Representatives, the lower chamber of parliament, on Wednesday.
 

He added that the rate "is highly likely to rise steadily to 2 pct in the not-too-distant future." 
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