BOJ expected to raise core inflation forecast

The Bank of Japan is said to be revising upward its core inflation expectations, which exclude fresh food and energy prices, for 2022 and 2023 from its quarterly macroeconomic forecasts to be released this month. According to sources familiar with the matter, the BOJ will demonstrate that the revisions it will make will demonstrate a growing belief that strong domestic demand will allow companies to increase prices in the coming years and keep inflation around the 2 percent target. However, the sources also emphasize that the BOJ’s raising of inflation expectations is unlikely to trigger an interest rate hike in the near future. In a statement made in October, the BOJ had forecast its core inflation expectation, which excludes fresh food and energy prices, as 1.8 percent for the current fiscal year and 1.6 percent for fiscal years 2023 and 2024. The bank will announce its new forecasts after a two-day policy meeting ending on January 18.