Tokyo, Jan 18 The Bank of Japan (BOJ) on Tuesday raised its inflation forecast for the fiscal year from April, with the view based on a comparatively weak yen in the face of rising energy and raw material costs.
The BOJ, in addition, after its two-day policy-setting meeting, opted to leave unchanged its ultraloose monetary policy to prop up the ailing economy, which has been repeatedly battered by the effects of surging Covid-19 cases, reports Xinhua news agency.
The bank said in a report that it forecast the core consumer price index, excluding volatile fresh food items, would increase 1.1 per cent in fiscal 2022, an upward revision from an initial projection of a 0.9 per cent increase.
The economic growth outlook for fiscal 2022 was also raised by the central bank from an initial 2.9 per cent forecast in October to 3.8 per cent.
"A pickup in Japan's economy has become evident as the impact of Covid-19 at home and abroad has waned gradually," the BOJ said in the quarterly outlook report.
This compares to the BOJ's previous view that Japan's economy was in a "severe state due to the pandemic, though it had picked up as a trend".
The upward revision by the BOJ comes despite the nation continuing to grapple with the rapid spread of the Omicron variant, which will see Japan's capital and 10 other prefectures possibly put under a quasi-state of emergency, a move that will once again hammer the service and transportation sectors, among others, in the affected areas.
The central bank's policy board at the conclusion of its two-day meeting, meanwhile, also decided that the continuation of its short-term policy rate of minus 0.1 per cent would be kept, and long-term yields maintained at close to zero per cent.
The BOJ also upgraded its view on risks to prices based on embryonic signs of inflation.
It said they are "generally balanced", compared to its previous view that they were "skewed to the downside".
The CPI upgrade to 1.1 per cent for 2023 from a previous projection of 1.0 per cent, however, is still a long way off the bank's lofty 2.0 per cent inflation target.
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