The Bank of Japan is expected to leave its unorthodox ultra-easy monetary policy unchanged and repeat its current assessment of the economy at its two-day policy meeting from Monday, sources close to the matter said.
The BOJ Policy Board is expected to focus on the impact of the recent plunge in oil prices and annual spring wage talks on its efforts to stoke 2 percent inflation.
BOJ Deputy Gov. Hiroshi Nakaso said Monday the central bank is not ready to take additional monetary easing because crude oil prices are likely to rebound moderately and the year-on-year inflation rate is “expected to reach around 2 percent in and around fiscal 2015,” the timing set by the BOJ.
For prices to rise in a country long mired in deflation, the BOJ believes consumer spending needs to pick up while supported by wage hikes and better employment conditions.
Prime Minister Shinzo Abe has been calling on Japanese companies to hike wages, but the response has been lukewarm.
The BOJ said after its previous meeting in February that the economy is recovering moderately.
The Policy Board is watching to see whether small and midsize companies will be able to raise wages, and how much companies will pass on their rising import costs, largely caused by the BOJ’s weakening of the yen, to their wholesale prices, according to the sources.