Nomura Securities' Morita Kyohei (森田京平) has updated the Bank of Japan outlook with a new scenario. The new base case assumes rate hikes in October 2026, March 2027 and July of the same year.
The Bank of Japan held its monetary policy meeting on 31 July 2026 and left its policy rate unchanged at around 1.0%. In line with market expectations, there was no surprise, and the decision was consistent with the assumptions set out in the published Outlook for Economic Activity and Prices.
Morita Kyohei (森田京平), chief economist at Nomura Securities' Financial and Economic Research, released Nomura Securities' new Bank of Japan scenarios. The new base case assumes 3 rate hikes, in October 2026, March 2027 and July 2027, while risk scenario A assumes hikes in December 2026 and June 2027, and risk scenario B assumes hikes in September 2026, January to March 2027, and June to July 2027.
The Outlook Report maintained its forecast that underlying CPI inflation would reach around 2% from the second half of fiscal 2026 through fiscal 2027, against a backdrop of rising global demand related to AI and a weaker yen. It also newly cited a downside risk for fiscal 2027 core CPI, stemming from more aggressive wage- and price-setting behaviour by companies and higher medium- to long-term inflation expectations.