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Most of the Bank of Japan’s Policy Board members are expected to forecast in a report due out Friday that deflation will continue into fiscal 2004.

This signals that the central bank will continue its “quantitative” ultra-easy monetary policy well into the next fiscal year, monetary sources said Wednesday.

The forecast for the continuation of deflation will be included in the Outlook and Risk Assessment of the Economy and Prices to be adopted at the BOJ Policy Board meeting Friday, they said.

“We have yet to see a light at the end of the deflation tunnel,” one board member was quoted as saying.

The BOJ said last month it is committed to maintaining the quantitative easing policy until the most recently published core consumer price index registers zero percent or above and this tendency is confirmed over a few months.

The bank is also committed to maintaining the quantitative easing policy until most of the Policy Board members are convinced that the prospective core CPI is not expected to register below zero percent.

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