By Leika Kihara
TOKYO, April 30 (Reuters) – The Bank of Japan saw core inflation hovering around 3%, well above its 2% target, for two years in a row under a risk scenario released on Thursday that assumed elevated oil prices and a weakening yen.
Under the board’s baseline scenario released on Tuesday, the BOJ said it expects the core consumer price index (CPI) to rise 2.8% in the current fiscal year ending in March 2027 and by 2.3% the following year.
In a rare move, the central bank released on Thursday a risk scenario based on the assumption that crude oil prices remain at around $105 per barrel through the year-end, the yen weakens 10% from current levels and stock prices fall by 20%.
Under the risk scenario, core inflation will hit 3.1% in fiscal 2026 and 3.0% in 2027 before slowing to 2.3% in 2028, the BOJ said in a full version of its quarterly outlook report.
“It is especially notable that a rise of about 3% is expected for two years in a row in fiscal 2026 and 2027,” the report said.
“This upward deviation in the CPI could become a factor that pushes up medium- to long-term inflation expectations,” it said.
(Reporting by Leika Kihara; Editing by Muralikumar Anantharaman)
