MARKET OUTLOOK - Projections Change Little, Rate Hikes on the Horizon

According to Stefan Angrick from Moody's Analytics, the outlook of the Bank of Japan is moderately hawkish. The economist indicated that growth and inflation forecasts suggest interest rate hikes are on the horizon. The projections show very little change, except for a slight upward revision in growth for the fiscal year 2025 and a slight decrease in inflation.

Angrick noted that the BOJ argues the economy is recovering moderately and growing above its potential rate, emphasizing that consumption is on a “moderate upward trend” and that the term “resilient” used in July has changed. He stated, “These cautious optimistic assessments contradict the weak data observed last year,” and added, “The Japanese economy is stagnating, and evidence of demand-driven price pressures is scarce.”