The Bank of Japan published its January 2026 Outlook for Economic Activity and Prices, maintaining a baseline of moderate economic growth and a temporary inflation slowdown, and reiterated that it will continue to raise the policy interest rate and adjust monetary accommodation if the outlook is realized. The consumer price index (all items less fresh food) is projected to decelerate to below 2 percent in the first half of the year as food-price effects wane and government measures push down prices, before underlying inflation gradually rises and becomes generally consistent with the 2 percent price stability target in the second half of the projection period. Policy Board median forecasts put real GDP growth at 0.9 percent in fiscal 2025, 1.0 percent in fiscal 2026 and 0.8 percent in fiscal 2027, with CPI (all items less fresh food) at 2.7 percent, 1.9 percent and 2.0 percent respectively. Compared with the previous outlook, real GDP growth projections for fiscal 2025 and 2026 were revised somewhat higher while fiscal 2027 was revised somewhat lower, and CPI projections were broadly unchanged; risks were assessed as generally balanced, with attention focused on overseas activity under trade policies, firms’ wage and price-setting behaviour, and financial and foreign exchange market developments, alongside monitoring of asset prices and the non-bank financial intermediary sector.
Bank of Japan 2026-01-23
Bank of Japan publishes January 2026 outlook expecting CPI excluding fresh food to fall below 2 percent then rise toward target and signals continued rate hikes
The Bank of Japan's January 2026 Outlook for Economic Activity and Prices maintains expectations of moderate economic growth and a temporary inflation slowdown, with plans to raise the policy interest rate if the outlook is realized. Real GDP growth is forecasted at 0.9% for fiscal 2025, 1.0% for 2026, and 0.8% for 2027, while CPI (all items less fresh food) is projected at 2.7%, 1.9%, and 2.0%, respectively, with risks assessed as generally balanced.