By MarketWatch
TOKYO (MarketWatch) -- The Bank of Japan may consider upgrading its consumer price index forecast for the next fiscal year beginning in April 2011 in its official outlook due later this month, as rising natural resource prices and a weak yen put upward pressure on prices, according to a report Tuesday.
The expectation could be lifted to zero, from a prediction for a 0.2% decline in the central bank's last outlook, Japanese business daily Nikkei reported.
Such a change would mark the first break from negative territory in three years and would reflect a growing view among BOJ policy-board members that the economy could turn a corner in the first half of the current fiscal year, the report said.
The report came amid news Japan's corporate goods price index, the main gauge of wholesale prices, fell 1.3% in March from a year earlier, according to BOJ data released Tuesday.
That was a steeper fall than the median forecast for a decline of 1.1% predicted by economists surveyed by Reuters. Prices rose 0.2% from February, compared with the 0.3% gain predicted by economists surveyed by Kyodo News.
Japanese wholesale prices for the fiscal year, which ended March 31, fell 5.2%.
The BOJ cut its key overnight call rate to 0.1% in December 2008, "and is likely to remain there indefinitely in the face of lingering deflation," said analysts at Action Economics.
Tankan Survey Points to Continued Japan Growth
Tankan shows improving profit margins could support Japan stocks in the second quarter. Dow Jones Newswires' Mark Cranfield reports.
The BOJ releases its Outlook for Economic Activity and Prices in April and October, and reviews the report in July and January.
The latest January review cited three straight years of CPI declines through fiscal 2011.
The CPI for fiscal 2010, excluding special factors, is also likely to be upgraded from a prior 0.5% decline. The policy board may also bump up its projection for this fiscal year's real gross domestic product, the report said.
At its most recent meeting earlier this month, the BOJ unanimously voted to keep its key interest-rate target steady at 0.1%, as widely expected, as it gauges the effects of its liquidity-boosting steps on the Japanese economy.
The panel also remained upbeat on its overall economic view, after its quarterly tankan survey of business sentiment showed improvement. See full story on previous Bank of Japan policy meeting.