BOJ to forecast inflation approaching 2 percent target in FY2019, 2020: sources

TOKYO (Reuters) – The Bank of Japan will likely maintain its view that inflation will reach its 2 percent target during the next fiscal year and stay near that level the following year, in new forecasts due out next week, sources familiar with its thinking said.

But the central bank will reassure markets it is nowhere near an exit from years of ultra-loose policy given risks to the inflation outlook, such as uncertainty on how quickly companies would raise wages to meet labor shortages, the sources said.

“The economy is sustaining momentum for inflation to reach 2 percent. But the pick-up in inflation remains modest,” said one of the sources, a view echoed by two more sources.

The BOJ will conduct a quarterly review of its growth and price forecasts at a rate review on April 26-27, when it is expected to keep monetary policy unchanged.

There had been some market speculation that the BOJ would downgrade its 2019 inflation forecast. It will be releasing its 2020 projection for the first time.

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