The Bank of Japan is expected to raise its inflation forecast but maintain ultra-low interest rates at this month's policy meeting, sources say, as fears of a U.S. recession and rising input costs cloud the outlook for its fragile economic recovery.
In a quarterly report due at the July 20-21 meeting, the BOJ is likely to project core consumer inflation will slightly exceed its 2% target in the current fiscal year ending in March 2023, up from the present forecast of 1.9% made in April, the sources say.
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Price rises are broadening and inflation expectations are heightening. But economic uncertainty is very high," said one of the sources, a view echoed by a second source.
"What's important is for wages and services prices to rise more, which will largely depend on the strength of the economy going forward," a third source said.
