Japan’s central bank hiked its inflation forecasts and halved its growth projections after the Iran war sent oil prices soaring, reports Reuters.

The Bank of Japan (BoJ) said it expected inflation this fiscal year to hit 2.8 per cent, up from its previous projection of 1.9 percent, while it also kept its main policy rate at 0.75pc.

“Comparing the projections… with those presented in the previous Outlook Report, the projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2026 is significantly higher, and that for fiscal 2027 is also somewhat higher, reflecting the effects of the rise in crude oil prices,” the BoJ said.