The Bank of Japan is likely to cut its consumer inflation forecast for the 2017 financial year in a quarterly review of its economic projections, the Sankei newspaper reported on Thursday.
The BoJ is likely to reduce its estimate to the lower 1 per cent zone from 1.7 per cent now for the financial year starting in April, as a stronger yen, weak oil prices and sluggish consumer spending curb inflation, the Sankei reported.
The cut means the central bank could push back the timing of its goal to reach 2 per cent consumer inflation to some time during the next financial year, the paper said.
The BoJ's quarterly report is due out on November 1 after a two-day policy board meeting.
"The BoJ has to lower its forecasts, because they are out of line with what most economists outside the BoJ are forecasting," said Norio Miyagawa, senior economist at Mizuho Securities.
"The BoJ is willing to take more time to meet its inflation target, so I don't expect additional easing. In the future, the BoJ should consider dropping the time frame for its inflation target."
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BoJ Governor Haruhiko Kuroda and board member Yutaka Harada signalled on Wednesday they had raised the threshold for further easing in a sign the central bank has accepted it will take more time to see consistent price gains.
The BoJ last month switched its policy target to interest rates from expanding the monetary base after more than three years of massive asset purchases failed to generate sustained inflation.
Under its new "yield curve control" framework, the BoJ's main means for easing would be to deepen negative rates from the current minus 0.1 per cent, or lower its new 10-year government bond yield target - now set at around zero per cent.