Svmuureported that a risk scenario released by the Bank of Japan on Thursday shows that, assuming oil prices remain high and the yen weakens, core inflation will hover around 3% for two consecutive years, significantly above its 2% target. In the baseline scenario released on Tuesday, the Bank of Japan stated that it expects the core consumer price index (CPI) to rise by 2.8% in the current fiscal year ending March 2027 and by 2.3% in the next fiscal year. On Thursday, the Bank of Japan released a rare set of risk scenarios, assuming crude oil prices will remain around $105 per barrel by the end of the year, the yen will depreciate 10% from current levels, and stock prices will fall 20%. Under this risk scenario, core inflation would rise to 3.1% in fiscal 2026, 3.0% in fiscal 2027, and then fall back to 2.3% in 2028. The report stated: "It is particularly noteworthy that it is expected to remain around 3% for two consecutive years in fiscal 2026 and 2027." The report also added: "This upside deviation in CPI could become a factor in pushing up medium- to long-term inflation expectations." (Jin Shi)