BOJ set to keep ultra-low rates, may signal inflation overshoot
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TOKYO : The Bank of Japan (BOJ) is expected to maintain ultra-loose monetary policy next week and its forecast for a moderate economic recovery, as robust corporate and household spending cushion the blow from slowing overseas demand, sources said.
The central bank also may signal that inflation is overshooting its forecasts, which would heighten the chance of an upgrade in its price projections at a quarterly review of its estimates due in July, they said.
But any upgrade in its inflation view is unlikely to automatically trigger an interest rate hike, as BOJ Governor Kazuo Ueda has stressed the need to maintain ultra-loose policy until durable wage growth accompanies the price rises.
Ueda told parliament on Friday that corporate price-setting behaviour was showing changes that could work to push up inflation more than expected.
"Consumption appears to be holding up and underpinning the economy," said one source familiar with the BOJ's thinking.
