The Bank of Japan is considering raising its economic growth forecast for the year through March 2019 due to the nation’s robust export figures, sources said Tuesday.
But persistently low inflation means the BOJ’s decision-makers are likely to maintain the policy of aggressive monetary easing, they said.
BOJ Gov. Haruhiko Kuroda and the rest of the board may upgrade their median forecast for the expansion of real gross domestic product in fiscal 2018 from the current 1.4 percent to between 1.5 and 1.9 percent, according to the sources.
The latest forecast will come in the bank’s economic outlook report to be released after the board’s two-day policy meeting through Jan. 23.
Japan is showing signs of a resilient recovery as manufacturers in particular benefit from the strengthening global economy. Some companies are posting record earnings and capital expenditure has been on the rise.
Central bank officials expect the trend to continue especially with the U.S. corporate tax cut and domestic demand to remain supported by investment ahead of the 2020 Tokyo Olympics, the sources said.
The government forecasts real GDP growth of 1.8 percent in fiscal 2018.
Slow inflation remains a headache for the BOJ, remaining below its 2 percent target, as tepid wage growth curbs household spending. Core consumer prices, excluding fresh food prices, rose just 0.9 percent in November.
Kuroda reiterated last month that the central bank will continue its policy framework targeting short-term and long-term interest rates “as long as necessary” to reach the inflation goal.
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