The Bank of Japan (BOJ) is likely to slightly revise upward its economic growth forecast for fiscal year 2025 at its upcoming policy meeting in October, according to sources familiar with the matter.

Despite facing headwinds from higher U.S. tariffs, the central bank is expected to maintain its view that Japan’s economy continues on a path of moderate recovery. The anticipated revision reflects recent improvements in domestic demand and resilience in business investment, which have partially offset the impact of external uncertainties.

The BOJ currently projects real GDP growth of around 1.2% for FY2025. The revised forecast could see a modest increase, though the final figures will depend on updated economic data and global conditions.

The October policy meeting will be closely watched for any changes to the BOJ’s forward guidance and interest rate outlook, especially as markets continue to assess the timing of any further normalization of Japan's ultra-loose monetary policy.

Analysts note that while the global trade environment remains challenging, especially with the recent imposition of U.S. tariffs on Japanese exports, domestic economic fundamentals have shown signs of steady improvement.

The BOJ is expected to release its updated economic projections alongside the policy decision at the end of its two-day meeting later this month.