BOJ Downgrades Japan's Inflation Forecast to 2.8%

Japan's inflation forecast has been revised downward to 2.8% for fiscal year 2026, according to Nikkei, citing a potential downgrade in the Bank of Japan's core CPI growth outlook.

The current numbers show that core CPI came in at just 1.4% in May 2026 and 1.6% in June, both below the BOJ's 2% target.

Analysts previously ratcheted up their FY26 core CPI forecasts from roughly 1.9% to 2.8%, expecting energy prices to keep climbing, but this bet hasn't paid off.

The BOJ now faces a familiar contradiction: undershooting inflation targets while considering an upward revision to its FY26 economic growth forecast.