BOJ to cut next fiscal year's CPI forecast to 1.5% or lower: sources

[TOKYO] The Bank of Japan is expected to cut its core consumer inflation forecast for next fiscal year - the deadline for meeting its 2 per cent target - to 1.5 per cent or lower, sources say, keeping it under pressure to expand an already huge stimulus programme.

Sources told Reuters in December that the BOJ looked set to cut its inflation forecasts at its Jan 20-21 rate review. But the scale of the cut will be deeper than initially projected as oil prices have continued to dive since then, the sources said.

Oil prices have fallen about 60 per cent since last June. The BOJ may cut its core consumer inflation forecast for the fiscal year ending in March 2016 to 1.5 per cent or lower from the 1.7 per cent it projected in October, said sources familiar with its thinking.

Having just eased policy in October, many BOJ officials want to hold off on additional stimulus for now.

But cutting its price forecasts will put pressure on the central bank to either ease policy again or acknowledge that it will take more time to meet its ambitious price target, analysts say.

REUTERS