Breaking News
Investing Pro 0

BOJ likely to raise inflation forecast near 2%, vow to keep easy policy - sources

Economy Apr 15, 2022 04:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo/File Photo

By Leika Kihara and Takahiko Wada

TOKYO (Reuters) -The Bank of Japan (BOJ) is likely to raise its inflation forecast for this fiscal year to near 2% at this month's policy meeting as global commodity inflation drives up energy and food costs, said three sources familiar with the bank's 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.

"Consumer inflation may accelerate to near 2% this fiscal year, but mostly due to rising fuel and food costs," one of the sources said.

"It's too early to withdraw stimulus because wage growth is slow and the economy is still weak," the source said.

Two other sources echoed that view.

In new 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 1.1%, the sources said.

A Reuters poll in March showed analysts expect core consumer inflation to hit 1.6% in fiscal 2022.

The board is also expected to trim this fiscal year's growth forecast, the sources said, as rising raw material costs caused by 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 faster than the 2.6% growth projected in a Reuters poll.


Lingering supply constraints, soft consumption and the pinch from global commodity inflation have cast doubt on the BOJ's view the economy is picking up and headed for a steady recovery.

While the BOJ still expects the economy to recover, it will likely warn of rising risks to the outlook as the Ukraine crisis weighs on global and domestic demand, the sources said.

Analysts say Japanese inflation likely won't gain the kind of momentum seen in countries like the United States, where rising prices are accompanied by strong wage growth, prodding central banks to plan aggressive interest rate increases.

The BOJ's new projections will likely show consumer inflation slowing back to around 1% in fiscal 2023 as the impact of recent fuel price rises tapers off, the sources said.

In the current forecasts, the BOJ expects core consumer inflation to hit 1.1% in fiscal 2023.

Several BOJ executives, including Governor Haruhiko Kuroda, have said core consumer inflation will likely accelerate to around the bank's 2% target from April due to rising fuel costs and the dissipating effect of past cellphone fee cuts.

They have also said the BOJ won't respond to cost-push inflation with tighter policy, and it will maintain stimulus until inflation stably hits 2% on the back of strong wage growth.

At the policy meeting, the BOJ is widely expected to maintain a pledge to guide short-term interest rates at -0.1% and cap long-term borrowing costs around 0%.

BOJ likely to raise inflation forecast near 2%, vow to keep easy policy - sources

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Pavel Marchenko
Pavel Marchenko Apr 15, 2022 4:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email