At its two-day policy meeting starting Tuesday, the Bank of Japan is expected to maintain its fiscal 2015 target for beating deflation, as it believes the economy will continue to recover even after a sales tax hike in April, sources close to the matter said.
At the meeting, the central bank will review its semiannual economic outlook issued in October, which projects the core consumer price index excluding fresh foods rising 1.9 percent in fiscal 2015.
The BOJ will also likely decide to keep intact its ultraeasy monetary policy introduced last April, but note that it will consider additional easing steps in case the economy falters, the sources said.
But there are some members of the BOJ policy board and other officials who think the central bank should avoid further easing if possible, arguing changing the current stance of not taking steps incrementally could lead to confusion in financial markets, they said.
The BOJ is also expected to maintain its economic assessment that the domestic economy is “recovering moderately” on the back of solid domestic demand.