BoJ Monetary Policy Meeting (June 2026): as reported

Research evidence excerpt

BoJ Monetary Policy Meeting (June 2026): as reported

prices have been exerting downward pressure on

economic activity, the economy has generally been supported by factors such as high levels of corporate profits and an

improvement in the employment and income situation. Meanwhile, the risk of a significant slowdown in the economy

appears to have decreased compared with a while ago. This is mainly because the effects of the government’s various

measures including those to reduce the household burden of higher energy prices will continue to provide support, and

progress has been made in securing alternative sources of supply for raw materials that are highly dependent on the Middle

East. Against this backdrop, Japan’s economy has been developing generally in line with the baseline scenario, which

expects that the economy will continue growing moderately, albeit at a decelerated rate.

Background

explanation of policy Onbeentheatpricea levelfront,belowthe2year-on-yearpercent due rateto factorsof increasesuch asin thethe consumereffects of thepricegovernment’sindex (CPI, allmeasuresitems lessto reducefresh food)the householdhas recently

change burden of higher energy prices. However, the price pass-through stemming from the rise in crude oil prices has been

progressing at a relatively fast pace in business-to-business transactions, which could spread to an increase in consumer

prices across a wide range of items. Against this backdrop, taking into account that medium- to long-term inflation

expectations have also continued to rise, there is a risk of underlying CPI inflation deviating upward to a level above the price

stability target of 2 percent.

Japan’s financial conditions have been accommodative. Real interest rates have been negative, mainly in the short- to