The Bank of Japan is expected to consider revising down its forecasts for the country's economy and prices in a quarterly report to be adopted at its two-day policy-setting meeting from Wednesday, due to the impact of U.S. President Donald Trump's high tariff policy.
Meanwhile, the central bank is likely to keep its monetary policy unchanged.
Trump indicated his intention to impose high tariffs on Japanese products as well, fueling concerns that Japanese companies could face declining exports and deteriorating earnings. Against this backdrop, the BOJ is projected to consider lowering its fiscal 2025 growth forecast for the Japanese economy, which stood at 1.1% in its latest Outlook for Economic Activity and Prices report released in January.
Furthermore, given the possibility of an economic downturn, the BOJ is expected to consider lowering its core consumer price index outlook for fiscal 2025, which started this month, and also for fiscal 2026. In the January report, the central bank said it expects the core CPI to go up 2.4% in fiscal 2025 and rise 2.0% in the following year.
The BOJ currently expects that its price stability target of 2% will be realized stably around fiscal 2026, which is in the latter half of the projection period of the outlook report.
The focus of the upcoming report will be on whether the projected timing of achieving the price target will be pushed back to fiscal 2017 due to the possible lowering of economic growth and price forecasts.
However, even if the target achievement date is postponed, the BOJ is expected to maintain its policy of raising interest rates, as it believes that the mechanism for underlying inflation to rise toward 2% remains intact.
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