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BoJ to Cut Inflation Forecasts

BoJ to Cut Inflation ForecastsBoJ to Cut Inflation Forecasts

Japan’s central bank will cut its inflation forecasts but hold off expanding stimulus this month, people familiar with the matter say, in another sign the bank is retreating from Governor Haruhiko Kuroda’s initial pledge to do whatever it takes to achieve his ambitious inflation target, Reuters reported. The inflation downgrade would be a fresh blow to Kuroda less than a year before his tenure ends next April, and underscores the challenges the central bank faces in using monetary stimulus to both lift prices and convince the public that its policies are working. “Given the economy is in such a good shape, it’s hard to explain why inflation remains so weak. This will be among key topics of debate at this month’s BoJ meeting,” said one of the sources, a view echoed by two other sources. But the BoJ is likely to cut its inflation forecast for the current year ending in March 2018, and possibly that for the following year, in a quarterly review of its long-term projections to be released on July 20, they said.

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