Bank of Japan may hike inflation forecast amid surging oil prices

The Bank of Japan (BOJ) may significantly raise its inflation forecast at its monetary policy meeting this month due to the impact of rising oil prices, according to sources. Oil prices have climbed by around 50% since the outbreak of the U.S.-Iran war, and the BOJ is expected to lift its core inflation forecast for the current fiscal year from the existing 1.9%. The economic growth forecast, however, could be revised downward as uncertainty in the Middle East is unlikely to be resolved in the short term. The BOJ is scheduled to announce its interest rate decision and publish its economic outlook report on April 28. The sources noted that while some believe it is not the right time to fuel expectations of a rate hike amid the geopolitical uncertainty, others argue that an increase is necessary to address upside inflation risks. This suggests that divisions within the policy board could widen at this month's meeting.