BOJ Seen Cutting FY14 Inflation Forecast


TOKYO--The Bank of Japan is likely to project that consumer prices will rise less than 1% in fiscal 2014, downgrading its previous view of inflation and putting more pressure on itself to trot out additional monetary easing steps, the Nikkei reported in its Thursday morning edition.

The BOJ is weighing an upper-0% growth forecast for the consumer price index in the Outlook for Economic Activity and Prices due out Oct. 30. The nine-member policy board's median projection excludes the impact from the hike in the consumption tax to 8% from 5%, which is scheduled to take effect in April 2014.

The central bank had previously said that consumer prices would rise 1% starting in fiscal 2014. But a prolonged slowdown in overseas economies and other factors threaten to weigh on domestic prices.

BOJ Governor Masaaki Shirakawa revealed at an Oct. 5 news conference that the bank had downgraded its price outlook at a September policy board meeting, when it approved additional easing. The central has not indicated any specific inflation number since that adjustment, so the figure in the coming price outlook report will receive attention.

With the BOJ's effective inflation target of 1% set to remain out of reach, the central bank is likely to come under more pressure to offer additional monetary easing at its Oct. 30 policy board meeting.

The BOJ presents its price forecasts four times a year.

The previous projections in July called for price growth in fiscal 2012 and fiscal 2013 to reach 0.2% and 0.7% respectively. Both forecasts are poised to be downgraded.

A survey of private-sector economists, however, suggests the BOJ outlook for prices may still be somewhat bullish. Including the consumption tax increase, consumer prices will likely grow 2.38% in fiscal 2014, according to the average estimate of 40 private-sector economists surveyed in October by the Japan Center for Economic Research. But inflation is expected to reach just 0.4% when excluding the consumption tax hike.


  (END) Dow Jones Newswires
  10-17-121855ET



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