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July 03, 2018

BOJ likely to cut inflation forecasts for current, next fiscal years: sources

BOJ likely to cut inflation forecasts for current, next fiscal years: sources
FILE PHOTO: A pedestrian holding an umbrella and her wallet walks past the word "CASH", part of a sign on a street at a shopping district in Tokyo, Japan, March 7, 2016. REUTERS/Yuya Shino/File Photo

TOKYO (Reuters) – The Bank of Japan is likely to cut its inflation forecasts for this fiscal year and the year to March 2020 at a meeting later this month with price pressures remaining stubbornly weak, people with direct knowledge of the bank’s thinking said.

More than five years after Governor Haruhiko Kuroda embarked on a massive easing policy aimed at stoking 2 percent inflation, the BOJ will likely cut its projection for core consumer prices for this fiscal year to around 1.0 percent from April’s 1.3 percent projection, and for next year to around 1.5 percent from 1.8 percent, the three sources told Reuters.

They spoke on condition of anonymity as the discussions are private.

The central bank will scrutinize structural factors behind the weakness in consumer prices when it conducts a quarterly review of its long-term growth and price projections, sources have said.

The core consumer price index, which includes oil products but excludes volatile fresh food prices, rose 0.7 percent in May from a year earlier, the same rate as April and far below the BOJ’s target of 2 percent.

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