Japan's economy continues to recover moderately, with wage growth accelerating and inflation rising closer to the 2% target.

Economic Outlook:

• Wage hikes in small and medium-sized firms outpaced those in large firms, though concerns remain over the sustainability of wage increases due to weaker business investment.
• Private consumption showed some weakness in January, reflecting higher food prices, but is expected to strengthen as wages rise.
• Heightened uncertainty surrounding U.S. policy risks and global economic conditions could impact Japan’s economic outlook.

Prices and Inflation:

• CPI inflation is gradually increasing and projected to align with the 2% target by late 2025.
• Food price increases, driven by higher labor costs and supply constraints, may push up inflation expectations further.
• Upward price pressures are expected to persist due to ongoing cost pass-through by firms.

Monetary Policy Decision:

• The BoJ plans to monitor the impact of recent interest rate hikes and global developments before making further policy adjustments.
• While risks to inflation and economic growth are balanced, the BoJ is prepared to adjust policy as needed, including a potential shift to a more neutral stance if inflation remains near the target.