Bank of Japan Considers Raising Inflation Forecast for Fiscal Year
According to reports, the Bank of Japan is contemplating increasing its inflation forecast for this fiscal year, excluding fresh food, from the current 2.4%, and raising its core inflation indicator excluding energy to 2% or higher.
Sources familiar with the matter have stated that the Bank of Japan may discuss raising its inflation forecast at its policy meeting later this month, following unexpectedly strong outcomes in annual wage talks. It is expected that the central bank will consider raising its consumer price forecast for the fiscal year starting this month from the current 2.4%.
Additionally, in its first forecast for the fiscal year starting in April 2026, the Bank of Japan is likely to expect price increases of around 2%. The yen initially weakened but later erased its losses for the day after the news broke.
Analysts anticipate that the Bank of Japan will maintain its current policy when it concludes its two-day meeting on April 26. Since the Bank of Japan raised interest rates last month for the first time in 17 years, investors have been eagerly awaiting any hints on the timing of the next rate hike.
Sources also mentioned that the Bank of Japan may consider raising its core inflation trend indicator excluding energy prices for fiscal 2024 to 2% or higher. The central bank believes that rising labor costs due to increasing wages will be a driving factor for future price increases.
In a recent article by The Wall Street Journal, Japanese companies have agreed to raise wages by 5.25% this year, marking the largest increase since 2013.
As always, investors are advised to exercise caution and consider their own financial situation before making any investment decisions. This article does not constitute personal investment advice and individuals should evaluate whether the information provided is suitable for their specific circumstances. Invest wisely and at your own risk.