As Reuters reports, Bank of Japan (BOJ) is likely to cut its core CPI forecast for the coming fiscal year to possibly below 1% at its policy meeting next Friday, three sources familiar with the matter noted.
The sources on condition of anonymity, further added, the BOJ is seen largely maintaining its inflation forecast of 1.8% for fiscal 2017, allowing it to argue that Japan is still on track to achieve the target - albeit at a disappointingly slow pace.
"A sharp cut in next fiscal year's inflation forecast is unavoidable due to the oil effect," said one source.
“The key is whether improvements in the broad price trend will continue and how the oil move affects inflation expectations," another source said.
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