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Oil Decline Likely to Impact BOJ Inflation Target

The plunge in the price of oil makes it increasingly uncertain whether the Bank of Japan will reach its 2 percent inflation target in the coming fiscal year, according to people familiar with the central bank’s discussions.

The BOJ is considering cutting its price forecast for the year that starts in April, according to the people, who asked not to be identified because the talks are private. The BOJ is also mulling raising its growth outlook for the same period, the people said.

The central bank isn’t currently inclined to expand already-record easing at a meeting next week, reflecting its view that the economy remains in a virtuous cycle and inflation expectations are steady, the people said. Last month, people familiar with the matter said that while cheaper energy costs may weigh on consumer prices for a time, they ultimately will boost the economy — spurring inflation.

Bloomberg [1]

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