The Bank of Japan’s latest Outlook Report highlights the risks of upside surprises in inflation and the impact of yen depreciation. The future course of monetary policy, with close attention to developments in the yen and AI demand, is coming into focus.
The Bank of Japan’s latest Outlook Report analyzes the economic and price outlook and the future course of monetary policy, discussing the outlook for core C in the second half of fiscal 2026 and the direction of policy.
It presents a view that further yen depreciation could lead to broader price increases, and explains that exchange-rate trends could affect price developments going forward.
Attention is also focusing on trends in AI demand, which are reported to have been taken up as a factor in monetary policy decisions.
While the possibility of additional rate hikes is suggested, the summary says that the situation remains one of awaiting official statements and further updates.