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BOJ Is Said Likely to Downgrade Inflation Forecast for This Year

Toru Fujioka and Masahiro Hidaka
(Bloomberg) -- The Bank of Japan will probably lower its inflation forecast for this fiscal year and could also downgrade some of its economic growth projections at its meeting next week, according to people familiar with the matter.The BOJ will likely lower its price forecast of 1.1% for the year ending in March 2020 to reflect subdued price growth in recent months and the impact of cheaper cell phone charges, the people said.The central bank will also discuss how a downgrade would weigh on price forecasts for later years, the people said. Growth projections could also be lowered given mounting uncertainties over the direction of the global economy, they added.The BOJ will release its updated economic outlook at the end of a policy meeting on July 30. Many economists see the current forecasts released in April as overly optimistic.The people flagged U.S.-China trade tensions, the slowdown in China’s economy and the global tech downturn among the factors making the BOJ’s baseline scenario of a recovery in the second half of this year less likely. Since April, global banks have turned more dovish with the Federal Reserve now widely expected to cut rates at its meeting next week.Global Economy Threats Prompt Cautious G-7 Pledge on Fiscal AidFinance ministers and central bankers at the Group of Seven meeting in France last week pushed back their expectations for a pickup in global growth to next year.BOJ Governor Haruhiko Kuroda also flagged heightened uncertainties for the global economy and nervousness in financial markets in a speech at the International Monetary Fund on Monday.The IMF on Tuesday trimmed its forecasts for global growth this year and next, including for Japan. It now sees Japan’s economy expanding 0.9% in 2019, down from 1.0%. It also slashed its estimate for 2019 growth in world trade volumes by 0.9 percentage point, to 2.5%.(Updates with latest IMF growth forecast.)\--With assistance from Yuko Takeo.To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net;Masahiro Hidaka in Tokyo at mhidaka@bloomberg.netTo contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson, Henry HoenigFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

(Bloomberg) -- The Bank of Japan will probably lower its inflation forecast for this fiscal year and could also downgrade some of its economic growth projections at its meeting next week, according to people familiar with the matter.

The BOJ will likely lower its price forecast of 1.1% for the year ending in March 2020 to reflect subdued price growth in recent months and the impact of cheaper cell phone charges, the people said.

The central bank will also discuss how a downgrade would weigh on price forecasts for later years, the people said. Growth projections could also be lowered given mounting uncertainties over the direction of the global economy, they added.

The BOJ will release its updated economic outlook at the end of a policy meeting on July 30. Many economists see the current forecasts released in April as overly optimistic.

The people flagged U.S.-China trade tensions, the slowdown in China’s economy and the global tech downturn among the factors making the BOJ’s baseline scenario of a recovery in the second half of this year less likely. Since April, global banks have turned more dovish with the Federal Reserve now widely expected to cut rates at its meeting next week.

Global Economy Threats Prompt Cautious G-7 Pledge on Fiscal Aid

Finance ministers and central bankers at the Group of Seven meeting in France last week pushed back their expectations for a pickup in global growth to next year.

BOJ Governor Haruhiko Kuroda also flagged heightened uncertainties for the global economy and nervousness in financial markets in a speech at the International Monetary Fund on Monday.

The IMF on Tuesday trimmed its forecasts for global growth this year and next, including for Japan. It now sees Japan’s economy expanding 0.9% in 2019, down from 1.0%.

It also slashed its estimate for 2019 growth in world trade volumes by 0.9 percentage point, to 2.5%.

(Updates with latest IMF growth forecast.)

--With assistance from Yuko Takeo.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net;Masahiro Hidaka in Tokyo at mhidaka@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson, Henry Hoenig

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.