Three sources said the Bank of Japan may keep a warning that consumer inflation
could exceed its 2% target at next week’s policy meeting, while indicating risks
have not risen materially since three months ago. The quarterly Outlook Report
is expected to flag ongoing inflation risks from the Middle East conflict,
strong global AI-driven demand and higher import costs from a weaker yen.
Officials judge the worst-case scenario — severe supply disruptions triggering
rapid tightening — less likely than three months ago. Wording used in June that
flagged a potential upward deviation of consumer inflation from the 2% target is
likely to remain. Sources said attention has shifted from a short-lived oil
shock to how far firms will continue to pass rising costs to households, a
factor for timing any future rate move.
