The Bank of Japan is likely to cut its inflation outlook for the current fiscal year next week, but will forecast price growth to roughly reach 2 percent in the following two years, sources said, underscoring the BOJ’s conviction that a steady recovery will keep the economy on track to hit the target.
Many BOJ policymakers prefer to hold off on further easing at the April 30 rate review, when they issue new long-term projections that will underline their optimism on the recovery and prospects for hitting their 2 percent inflation target, said sources familiar with the central bank’s thinking.The BOJ board members will carefully scrutinize risks before reaching a final decision, though it will take a very big cut in this fiscal year’s inflation forecast to trigger action, they noted.
“What’s important is that a broad uptrend in inflation, backed by prospects of solid economic growth, is intact,” said one of the sources on condition of anonymity. In the twice-yearly review of its forecasts, the BOJ will slightly cut its core consumer inflation forecast of 1.0 percent for the year to March 2016, taking into account the effect of last year’s recession and soft consumption, the sources said.
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