The Bank of Japan likely will cut its inflation forecast for fiscal 2019 from the current 1.4 percent to around 1 percent, due mainly to the decline in crude oil prices that greatly affect commodity prices.
The BOJ has set an inflation target of 2 percent, but it looks to be even more difficult to achieve this goal.
The central bank, which currently is making final arrangements for the revision, will hold its two-day Monetary Policy Meeting starting next Tuesday to compile the Outlook for Economic Activity and Prices. During this meeting, the nine board members who decide monetary policy will present the forecast figure for the inflation rate.
The inflation forecast for fiscal 2019 was trimmed in October from 1.5 percent to 1.4 percent. A further cut is being considered because the price of crude oil has been declining since the autumn, which will likely lead to a fall in areas related to oil products such as electricity fees and gasoline prices.
Many board members had been planning to lower their forecast for the inflation rate in fiscal 2019. The forecast for fiscal 2020 also could be cut from the current 1.5 percent.
At the upcoming meeting, the overall economic assessment will be kept as it is, but the BOJ will increase its wariness about the future of the economy with mounting uncertainty over the course of the global economy, amid trade frictions between the United States and China, and Brexit issues. The BOJ will also take into account the possible impact of China's economic deceleration.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
