BOJ Outlook Report (January 2026): moderate growth, inflation to dip below 2% in the first halfHow the Bank of Japan sees the economy ahead (January 2026)
On January 23, 2026, the Bank of Japan published the Bank's view in its Outlook for Economic Activity and Prices (January 2026), decided at the Monetary Policy Meeting held on January 22 and 23. It expects the economy to keep growing moderately as the positive cycle from income to spending gradually strengthens. Year-on-year CPI (all items less fresh food) is expected to narrow below 2% in the first half of this year, then gradually rise, and in the latter half of the projection period to move at a level broadly consistent with the price stability target.
Key points
- The economy is projected to keep growing moderately, affected by trade policies in various countries but supported by overseas economies returning to a growth path, the government's economic measures and accommodative financial conditions
- Year-on-year CPI (all items less fresh food) is expected to narrow to below 2% in the first half of this year as the effects of higher food prices such as rice fade and government measures against rising prices take effect, then to rise gradually as labor shortages intensify and medium- to long-term inflation expectations rise
- Compared with the previous projections, growth is somewhat higher for fiscal 2025 and 2026 owing to the effects of the government's economic measures, and somewhat lower for fiscal 2027; CPI (all items less fresh food) is broadly unchanged
- Risk factors include overseas economic and price developments affected by trade policies, firms' wage- and price-setting behavior, and developments in financial and foreign exchange markets. Risks to both economic activity and prices are broadly balanced
What to do in practice
- When considering price or wage revisions, note the external backdrop: the Bank sees inflation dipping below 2% in the first half of the year
- Check the assumptions and risk factors in the original text of the Bank's view
Four times a year the Bank of Japan publishes an Outlook Report on how the economy and prices are likely to move. In the January 23, 2026 report, it expects Japan's economy to keep growing slowly. It expects price increases to ease for a while in the first half of this year and then pick up gradually again.
- (1) EconomyKeeps growing moderately
- (2) Prices, first half of the yearPrice increases ease to below 2%
- (3) After thatPrice increases gradually pick up as the economy improves and labor gets scarcer
- (4) Latter half of the projection periodMoves at a level broadly in line with the Bank's target
Points
- The economy is expected to keep growing slowly
- Price increases are expected to ease to below 2% in the first half of this year
- After that they are expected to rise gradually and move closer to the level the Bank is aiming for
What the words mean
- Outlook Report
- a report in which the Bank of Japan sets out its projections for the economy and prices, and its reasoning
- price stability target
- the Bank of Japan's goal of prices rising by about 2% a year
先行きのわが国経済を展望すると、各国の通商政策等の影響を受けつつも、海外経済が成長経路に復していくもとで、政府の経済対策や緩和的な金融環境などにも支えられて、所得から支出への前向きな循環メカニズムが徐々に強まることから、緩やかな成長を続けると考えられる。
リスクバランスをみると、経済・物価のいずれの見通しについても、概ね上下にバランスしている。
- Bank of Japan: Bank of Japan, Outlook for Economic Activity and Prices (January 2026), The Bank's View
Economic news presents published statistics and outlooks. It is not investment solicitation or trading advice. Figures are as of publication and may be revised.
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.