BoJ Quarterly Outlook Report: Risk to inflation skewed to upside for fiscal 2023, 2024

Risk to inflation skewed to upside for fiscal 2023, 2024.

Japan's economy is recovering moderately.

Inflation expectations showing signs of heightening again.

Japan's economy likely to continue recovering moderately.

Japan's economy to continue expanding above potential.

Wage growth has risen, signs of change have been seen in firms' wage, price-setting behaviour.

Inflation expectations have shown some upward movements again.

If upward movement in prices continue, effects of monetary easing will strengthen through decline in real interst rates.

Strictly capping long-term yields could affect bond market functioning, volatility in other markets.

Such effects are expected to be mitigated by conducting yield curve control with greater flexibility.

If downside risks to economy materialise, effects of monetary easing will be maintained through decline in long-term yields under yield curve control framework.

Board's core CPI fiscal 2023 median forecast at +2.5% vs +1.8% in April.

Board's core CPI fiscal 2024 median forecast at +1.9% vs +2.0% in April.

Board's core CPI fiscal 2025 median forecast at +1.6% vs +1.6% in April.

Board's real GDP median forecast for fiscal 2023 at +1.3% vs +1.4% in April.

Board's real GDP median forecast for fiscal 2024 at +1.2% vs +1.2% in April.

Board's real GDP median forecast for fiscal 2025 at +1.0% vs +1.0% in April.