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

The Bank of Japan. (Bloomberg pic)

TOKYO: 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% inflation, the BOJ will likely cut its projection for core consumer prices for this fiscal year to around 1.0% from April’s 1.3% projection, and for next year to around 1.5% from 1.8%, the three sources told Reuters.

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

The central bank will scrutinise 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% in May from a year earlier, the same rate as of April and far below the BOJ’s target of 2%.