BOJ seen slashing inflation forecast for this fiscal year – sources

FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo

By Leika Kihara

TOKYO (Reuters) -The Bank of Japan is expected to cut its inflation forecast for this fiscal year in quarterly projections due out next week, three sources familiar with its thinking said, reinforcing market expectations it will maintain its massive stimulus for the foreseeable future.

The downgrade will reflect the impact of cuts in cellphone charge fees, which analysts say could push down core consumer inflation by as much as 0.6 percentage points.

The BOJ currently expects core consumer prices to rise 0.5% in the fiscal year that began in April.

In fresh quarterly projections due at next week’s rate review, the BOJ is also seen projecting inflation to hover around 1% in fiscal 2023, the sources said on condition of anonymity as they were not authorised to speak publicly.

The Nikkei newpaper reported earlier on Tuesday the BOJ will consider slashing its inflation forecast for the current fiscal year.

(Reporting by Leika Kihara; Editing by Chris Reese and Ana Nicolaci da Costa)

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