TOKYO (Reuters) – The Bank of Japan is expected to raise its inflation forecast for the current fiscal year to near 2% at this month’s policy meeting as global commodity inflation drive up energy and food costs, said three sources familiar with its thinking.
While the upgrade will bring inflation closer to its 2% target, the central bank will stress its resolve to keep monetary policy ultra-loose to underpin a fragile economic recovery, the sources said.
In fresh quarterly projections due to be released at the April 27-28 policy meeting, the BOJ will likely lift its core consumer inflation forecast for the current fiscal year through March 2023 to above 1.5% from the present estimate of a 1.1% increase, the sources said.
The board is also expected to trim this fiscal year’s growth forecast, the sources said, as rising raw material costs blamed on the Ukraine war hurt global trade and domestic consumption.
The BOJ’s current forecast made in January is for the economy to expand 3.8% this fiscal year, far higher than 2.6% growth projected in a Reuters poll.
(Reporting by Leika Kihara and Takahiko Wada; Editing by Shri Navaratnam)