Tokyo: The Bank of Japan is seen raising its inflation forecast for fiscal 2023 at its two-day policy-setting meeting from Thursday, the first under new Governor Kazuo Ueda.

The BOJ’s Policy Board is also expected to discuss whether the central bank needs to conduct a long-term policy review.

Meanwhile, the central bank is widely expected to keep intact its current monetary easing framework including the yield curve control policy.

At a House of Representatives Financial Affairs Committee meeting on Tuesday, Ueda said that it is “appropriate” to continue the yield curve control policy, noting that the current shape of the yield curve is “smooth in general.”

“We are maintaining our easing stance because we take seriously the risk of a decline in inflation if we normalize policy now,” Ueda said.

At the upcoming meeting, the BOJ will compile a quarterly report that includes its latest economic growth and inflation forecasts.

In the previous report, released in January, the BOJ estimated growth in the country’s core consumer price index in fiscal 2023 at 1.6 pct.

In fiscal 2022, the price index jumped 3.0 pct from the previous year, posting the fastest growth in 41 years, according to data released by the internal affairs ministry on Friday.

Inflation in fiscal 2023 is expected to decelerate from the fiscal 2022 result, but is likely to remain high.

The forthcoming report will newly include forecasts for fiscal 2025. The BOJ is considering putting fiscal 2025 inflation mainly between 1.5 pct and 2 pct.

Meanwhile, the BOJ may discuss a possible long-term policy review, amid claims that as the bank’s monetary easing campaign has been prolonged, its side-effects, such as a decline in the functioning of the Japanese government bond market, have increased.

In his inaugural press conference on April 10, Ueda said that as the BOJ’s accommodative policy stance has continued for more than 20 years, it would be “fine” to conduct a comprehensive review of it.

JIJI Press