BOJ to predict weak inflation, pledge prolonged stimulus as COVID pain persists
26/04/2021 22:00
* BOJ ends 2-day meeting, decision expected 0230-0500GMT
* Board likely to keep rate targets unchanged
* BOJ seen cutting this year's price forecast - sources
* Board to predict inflation missing target beyond Kuroda's
term
* Governor Kuroda to brief media 0630GMT
By Leika Kihara
TOKYO, April 27 (Reuters) - Japan's central bank is expected
to maintain its massive stimulus on Tuesday and project
inflation missing its 2% target for years to come, as fresh
curbs to combat a spike in COVID-19 cases overshadow the boost
to growth from solid global demand.
Japan declared a third, two-week state of emergency for
Tokyo, Osaka and two other prefectures to contain the pandemic,
clouding prospects for a fragile economic recovery. urn:newsml:reuters.com:*:nL4N2MF4QX
In a quarterly report due after its two-day policy meeting
ending on Tuesday, the Bank of Japan is expected to stick to its
view the world's third-largest economy is headed for a moderate
recovery as robust U.S. and Chinese demand underpins exports.
But the bank is likely to cut this year's price forecast and
predict for the first time that inflation will stay well short
of its 2% target beyond Governor Haruhiko Kuroda's term, which
ends in early 2023, sources have told Reuters. urn:newsml:reuters.com:*:nL4N2MC45S
"I think the BOJ pretty much gave up on hitting its price
target and decided to focus on maintaining the current framework
for the rest of Kuroda's term," said Izuru Kato, chief economist
at Totan Research.
"It's doubtful whether maintaining the current policy long
enough will push up inflation to 2%. But no one in the
government seems to be complaining about weak inflation."
The BOJ is expected to maintain its short-term interest rate
target at -0.1% and that for 10-year bond yields around 0%.
Kuroda is expected to warn of risks from the state of
emergency curbs on the economy and reiterate the BOJ's readiness
to maintain its massive stimulus for the foreseeable future,
analysts say.
In current projections made in January, the BOJ expects core
consumer inflation to hit 0.5% in the fiscal year that began in
April and 0.7% the following year.
The bank is seen trimming the price forecast for the current
fiscal year due to the impact of cuts in cellphone fees, sources
say. It will also produce for the first time growth and price
projections for fiscal 2023.
The BOJ conducted a review of its policy tools in March to
make them sustainable enough to weather an expected prolonged
battle to fire up inflation. Japan's core consumer prices fell
for the eighth straight month in March. urn:newsml:reuters.com:*:nL1N2LH025 urn:newsml:reuters.com:*:nL4N2MF0LB
(Reporting by Leika Kihara; Editing by Sam Holmes)
((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))