BoJ to consider revising up inflation forecast at July meet

The Bank of Japan (BoJ) will consider revising up this month its inflation forecast for the current fiscal year, reflecting persistent rises in rice and broader food costs, said three sources familiar with its thinking.

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But the central bank is seen roughly maintaining its inflation forecasts for fiscal 2026 and 2027, the sources said, signaling a pause in interest rate hikes as it awaits more clarity on how US tariffs could affect Japan's economy.

"Recent inflation data has been fairly strong particularly due to the rising cost of rice, which is pushing up other prices such as those for dine-outs," one of the sources said.

"Consumer inflation is overshooting the BoJ's forecasts somewhat," another source said. "But underlying inflation remains short of 2%," the source said, a view echoed by the third source.

The sources spoke on condition of anonymity as they were not authorised to speak publicly.

The new projections will be announced after the BoJ's next policy meeting on July 30-31, when the board will conduct a quarterly review of its growth and inflation forecasts.

At the meeting, the BoJ is widely expected to maintain short-term rates at 0.5% due to uncertainty over how Japan's stalled trade talks with the US could unfold, and the extent of damage the US levies could inflict on the economy.