The Bank of Japan might forecast in its upcoming biannual economic outlook report that the nation's deflationary pressure will end in fiscal 2005, sources said Friday.
The BOJ expects the nationwide consumer price index, excluding perishable food products, will rise between 0.1 percent and 0.2 percent in fiscal 2005 over the previous year, they said.
The central bank will take the projection into account when it decides whether to end its quantitative easing policy introduced 3 1/2 years ago, they said. The report will be released by the BOJ on Oct. 29.
However, hopes of an early end to the policy might be dampened by the BOJ's expectations of a slowdown in Japan's economic growth in fiscal 2005.
In the October report, the policymakers will likely indicate a continuation of the BOJ's monetary easing policy until worries about Japan's economic outlook are completely wiped out.
The BOJ releases the reports in April and October, in which the nine members of its policy-setting board forecast economic and price trends. It is closely watched as an indicator of the direction of the central bank's monetary policy.