The dovish Bank of Japan faced a tough two-day policy-setting meeting that started Thursday due to potentially changing inflation dynamics, with edgy financial markets seesawing over whether its controversial yield cap program will be modified.
The BOJ is widely expected to revise upward its earlier inflation forecast for the current fiscal year to next March, given more evidence that price hikes, initially prompted by surging fuel and raw material costs, have been broadening in a notable change for the once deflation-mired nation.
Financial markets are fixated on whether Gov. Kazuo Ueda, who has warned of premature tightening, has grown more confident about the inflation outlook than before and the central bank would again allow long-term interest rates to trade in a wider range under its yield curve control program.