TOKYO: The Bank of Japan is expected to consider lifting its inflation forecast for fiscal 2022 from the current 1.9 percent to 2 percent or higher at its next monetary policy meeting, to be held for two days from Wednesday, reflecting higher oil prices and other factors.

At the same time, the central bank is expected to discuss lowering the fiscal 2022 economic growth forecast, currently at 2.9 percent, as corporate production activities are restrained by shortages of parts, due partly to COVID-19 lockdowns in China. Still, the bank is seen maintaining its current massive monetary easing policy.

The possible revisions would be reflected in the quarterly Outlook for Economic Activity and Prices report to be adopted at the upcoming policy meeting.

The BOJ putting growth in Japan’s core consumer price index in an ongoing fiscal year at 2 percent or above would be the first since comparable data became available in fiscal 2003, excluding fiscal 2014, when prices were affected by a consumption tax hike.

Such a rise in prices, if realized, would meet the BOJ’s inflation target of 2 percent on an annual basis.

According to the internal affairs ministry, the CPI rose 2.1 percent from a year earlier in May, marking growth of over 2 percent for the second consecutive month. The price index for Tokyo’s densely populated 23 wards, viewed as a leading indicator for the nationwide index, climbed 2.1 percent in June.

The recent results were due to a spate of price hikes for food and other products against a backdrop of Russia’s invasion of Ukraine, as well as a rise in import prices on the yen’s rapid weakening.

At the upcoming policy meeting, the BOJ is expected to discuss the possibility of inflation in fiscal 2023 slightly exceeding its current projection of 1.1 percent. Still, the bank seems likely to maintain the view that the current upward momentum on prices is temporary.

JIJI Press