© . FILE PHOTO: A man in a protective mask walks past Bank of Japan headquarters amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo/File Photo By Leika Kihara and Takahiko Wada TOKYO () – The Bank of Japan (BOJ) is likely to raise its inflation forecast for this fiscal year to nearly 2% at this month’s policy meeting as global commodity inflation drives up energy and food costs, it said three. sources familiar with the bank’s thinking. While the upgrade will bring inflation closer to its 2% target, the central bank will emphasize its determination to keep monetary policy ultra-easy to support a fragile economic recovery, the sources said. “Consumer inflation could accelerate to nearly 2% this fiscal year, but this is mainly due to rising fuel and food costs,” said one of the sources. “It is too early to withdraw stimulus measures as wage growth is slow and the economy is still weak,” the source said. Two other sources echoed that view. In new quarterly forecasts to be released at the April 27-28 policy meeting, the BOJ is likely to raise its core consumer inflation forecast for the current fiscal year through March 2023 to above 1.5% of its current estimate of 1.1%, the sources said. † A poll in March showed that analysts expect core consumer inflation to reach 1.6% in fiscal year 2022. domestic consumption. The BOJ’s current forecast, made in January, is that the economy will grow by 3.8% this fiscal year, much faster than the 2.6% growth forecast in a poll. NO EXCLUSION PERMITTED Continuing supply constraints, weak consumption and the contraction in global commodity inflation have cast doubt on the BOJ’s view that the economy is picking up and moving towards a steady recovery. While the BOJ still expects the economy to recover, it is likely to warn of mounting risks to the outlook as the crisis in Ukraine weighs on global and domestic demand, the sources said. Analysts say Japanese inflation is unlikely to gain the kind of momentum seen in countries like the United States, where rising prices are accompanied by strong wage growth, prompting central banks to plan aggressive rate hikes. The BOJ’s new forecasts are likely to show consumer inflation declining to around 1% in fiscal 2023 as the impact of recent fuel price hikes wanes, the sources said. In current projections, the BOJ expects core consumer inflation to reach 1.1% in fiscal year 2023. Several BOJ executives, including Governor Haruhiko Kuroda, have said core consumer inflation is likely to accelerate to around the bank’s 2% target from April on the back of rising fuel costs. and the dissipating effect of past cuts in cell phone rates. They have also said that the BOJ will not respond to cost inflation with tighter policies, and will maintain the stimulus until inflation reaches a steady 2% on the back of strong wage growth. At the policy meeting, the BOJ is widely expected to maintain a pledge to bring short-term interest rates to -0.1% and cut long-term borrowing costs around 0%.