Barclays predicts the Bank of Japan (BOJ) will update its fiscal year 2025 real GDP growth forecast from 0.6% to 0.8% in its upcoming quarterly outlook report. The revised prediction is driven by positive Q2 GDP data, decreasing trade and tariff uncertainty, and robust business sentiment as measured by the September Tankan survey. While the update suggests a more optimistic view of the Japanese economy’s future performance, BOJ Governor Kazuo Ueda is expected to emphasize potential downside risks for fiscal 2026. These include ongoing uncertainties surrounding US tariffs and their long-term impact on Japan’s exports. Barclays also anticipates that the BOJ will raise its policy rate in January 2026, as it continues its gradual withdrawal from ultra-loose monetary policy in response to persistent inflation and wage growth momentum.