The Bank of Japan will likely cut its inflation forecasts for the current fiscal year and for the year to March 2020 at its July meeting as price pressures remain weak, people with direct knowledge of the bank's thinking told Reuters July 3.
The BOJ, which targets 2% inflation, is likely to cut its projection for core consumer prices for the current fiscal year to about 1% from the bank's 1.3% projection during its meeting in April, and for the next fiscal year to around 1.5% from 1.8%, Reuters sources said.
Japan's core consumer growth held steady in May at an annual 0.7%, still well below the central bank target.
The central bank will review the structural factors behind the weakness in consumer prices during its quarterly review of long-term growth and price projections, sources told Reuters.
Meanwhile, the BOJ's June survey released July 3 showed that Japanese companies expect consumer prices to rise by an average of 0.9% in a year, slightly above the 0.8% in the bank's March survey.
Japanese firms surveyed in June expect consumer prices to increase by an annual 1.1% three years from now and 1.1% five years ahead, unchanged from the March survey.
Large manufacturing enterprises expect prices to climb an average of 0.6% in a year, 0.8% in three years, and 0.8% in five years, with big non-manufacturing enterprises sharing the same expectations. Results were little changed from the March survey.