The Economy Next Week: The mystique of central bank speak

Research evidence excerpt

The Economy Next Week: The mystique of central bank speak

NomuraNomura || TheThe EconomyEconomy NextNext WeekWeek 2424 JulyJuly 20262026

Japan | Data preview ResearchJapan EconomicsAnalysts

The week ahead Kyohei Morita - NSC kyohei.morita@nomura.com

Weexpectthepolicyratetobeleftunchanged,theCPIoutlooktobetrimmedandthe +81 3 6703 1395

GDPoutlooktoberaisedattheBOJ’sJulymeeting. Kengo Tanahashi - NSC

kengo.tanahashi@nomura.com

TheBOJ’smonetarypolicymeetingandOutlookforEconomicActivityandPrices +81 3 6703 1295

(OutlookReport;Thursday-Friday): We expect the policy rate to be left unchanged. It Uichiro Nozaki - NSC

is possible that some hawkish members will vote for a back-to-back rate hike. uichiro.nozaki@nomura.com

We expect the BOJ to lower its CPI inflation outlook and raise its GDP growth outlook in +81 3 6703 1284

view of the situation in the Middle East. However, we do not expect the BOJ to change its Yuki Ito - NSC

assessment that the distribution of risks to prices is skewed to the upside. yuki.ito@nomura.com

+81 3 6703 3867

We will be interested to see what Ueda has to say about the BOJ's independence.

The BOJ's independence looks to have been preserved, notwithstanding “the Honebuto

(Basic Policy) Shock”. We expect it to continue hiking interest rates in view of the upward

pressure on prices from the summer.

JulyTokyoku-areacoreCPI(Friday): We forecast Tokyo-ku core CPI (all items, less

fresh food) of 1.7% for July 2026, which would be up from 1.6% in June. We forecast the

BOJ's version of core-core CPI inflation (all items, less energy and fresh food) at 2.0%, up

from 1.9% in June.

Energy prices are the main factor behind the expected rise in CPI inflation. July is when

the rise in energy prices following the Middle East conflict, though modest, began to be