• Kyodo


The Bank of Japan is likely to forecast 1.5 percent annual growth over the next three years after its Policy Board meeting Wednesday, sources familiar with the matter said.

The central bank is also expected to retain its outlook on inflation, which — excluding the impact of the consumption tax hike — is forecast to rise to about 2 percent in the six months to March 2015, the sources said last week without mentioning which gauge it would use.

Inflation during fiscal 2015 and 2016 is likely to be projected at around 2 percent.

The sources suggested the nine-member Policy Board is likely to reiterate its view that the economy is undergoing a moderate recovery, and stick to its aggressive ultraloose monetary policy aimed at halting deflation.

It also will issue a semiannual outlook report for the next three years containing its first economic growth and price projections for fiscal 2016.

In January, the BOJ forecast that the economy would expand 1.4 percent in fiscal 2014 and 1.5 percent in fiscal 2015. The growth outlook for fiscal 2016 is likely to be similar to fiscal 2015.

The BOJ is expected to revise its growth figures for 2013-2014 down from 2.7 percent to below 2.5 percent, due to weaker exports as companies shift production abroad, as well as slowing growth in overseas economies.

The outlook for inflation reflects expectations for rising prices and personal spending as companies are pressured to raise wages to secure employees amid the labor shortage in sectors reliant on domestic demand, including service and construction.

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