Bank of Japan mulls sharp increase in 2023 inflation outlook

BANK of Japan (BOJ) officials meeting this week will probably consider a sharp increase to their inflation forecast for this fiscal year, while also discussing concerns about whether the upward trajectory is sustainable, according to people familiar with the matter.

The central bank’s policy board is likely to mull raising the consumer inflation projection to around 2.5 per cent for the year ending in March, up from 1.8 per cent in the April estimate, according to the people. They expect projections for the following fiscal years to be largely unchanged, to reflect a lack of confidence the bank can achieve its 2 per cent inflation goal in a stable manner, the people said.

The BOJ will release its quarterly economic report, together with a policy statement, at the Friday (Jul 28) conclusion of the two-day policy board meeting. 

In updating the bank’s Outlook Report, the board will probably discuss upgrading their economic assessment for the first time in a year, potentially characterising the economy as in recovery, the people said. That would bring the BOJ’s assessment in line with the government’s. BLOOMBERG