The Bank of Japan’s October 2026 Outlook projects that real gross domestic product will grow at a median rate of +0.7 percent year‐on‐year in fiscal 2026, remain at +0.7 percent in fiscal 2027, and rise slightly to +0.8 percent in fiscal 2028. These forecasts are presented as median estimates of the Policy Board members and are largely unchanged from the previous Outlook.
For price developments, the median forecast for the consumer price index (CPI) excluding fresh food is +2.5 percent year‐on‐year in fiscal 2026, +2.6 percent in fiscal 2027, and +2.0 percent in fiscal 2028. The Bank notes that the CPI rate is likely to accelerate to a level clearly above the 2 percent target before declining toward around 2 percent in the second half of the projection horizon.
The outlook attributes the modest growth to a mix of supportive factors: government measures to ease household energy costs, accommodative financial conditions, and a solid rise in global AI‐related demand. While higher energy and raw‐material prices stemming from the Middle‐East situation are expected to dampen activity, these headwinds are projected to wane after fiscal 2026.
Risks to the outlook are described as balanced for economic activity but skewed to the upside for inflation. Potential upside risks include further rises in crude‐oil prices, a weaker yen, and stronger wage‐price dynamics that could push underlying CPI inflation above the 2 percent target.
Overall, the BOJ emphasizes that medium‐ to long‐term inflation expectations remain near 2 percent, and that the projected growth path and price trajectory are consistent with the Bank’s price‐stability objective while acknowledging the need to monitor upside inflation risks.