In its October "Outlook for Economic Activity and Prices" report, the Bank of Japan (BOJ) stated that it expects Japan's economy to continue moderate growth in fiscal 2026, but at a slower pace, primarily dragged down by rising energy and raw material prices due to the situation in the Middle East. The report noted that government measures, accommodative financial conditions, and growing global AI-related demand would provide support. The BOJ anticipates that as the adverse effects of high energy and raw material prices diminish and the virtuous income-expenditure cycle gradually strengthens, the economic growth rate will moderately pick up from fiscal 2027 onwards. Compared to the previous report, the real GDP growth rate forecast remained largely unchanged.