TOKYO: The Bank of Japan (BOJ) raised its inflation prediction for the fiscal year starting in April, citing a relatively weak yen in the face of rising energy and raw material costs as justification.
In addition, the BOJ decided to maintain its ultraloose monetary policy after a two-day policy-setting meeting to support the struggling economy, which has been repeatedly hammered by the consequences of rising Covid-19 cases. In a research, the bank predicted that the core consumer price index, which excludes volatile fresh food products, will rise 1.1 percent in fiscal 2022, up from a previous expectation of 0.9 percent. The central bank also upped its economic growth prediction for fiscal 2022 from 2.9 percent to 3.8 percent, up from 2.9 percent in October.
In its quarterly outlook report, the Bank of Japan stated, "A recovery in Japan's economy has been obvious as the impact of Covid-19 at home and abroad has steadily dissipated." This contrasts with the Basnk’s previous assessment that Japan's economy was in a "serious state as a result of the epidemic, though it has begun to perk up as a trend."
The upward revision comes as the country continues to battle with the Omicron variant's rapid spread, which could see Japan's capital and ten other prefectures put under a quasi-state of emergency, wreaking havoc on the service and transportation industries, among others, in the affected areas.