TOKYO: The Bank of Japan may slightly cut its economic forecast for the current fiscal year at a quarterly review of its estimates next week, sources familiar with its thinking said, reflecting soft exports and a bigger-than-expected slump in household spending after a sales tax hike in April.
But the central bank will roughly maintain its upbeat price projections and stick to its view that the world's third-largest economy will continue a moderate recovery as the pain from the tax hike heals, the sources said on condition of anonymity.
With no major change in the broad economic outlook, the BOJ is set to keep monetary settings unchanged at its two-day rate review ending on Tuesday.
In its latest projections made in January, the BOJ expects the economy to expand 1.1 percent in the current business year that began in April, higher than a 0.9 percent rise forecast by analysts in a Reuters poll last month.
The central bank may revise down the forecast slightly after data released late last month showed household spending slumped 8 percent in the year to May, a sign that the tax hike took a heavier toll on consumption than expected in the April-June period.
Many private-sector analysts are expected to further cut their conservative growth projections for the second quarter and the full fiscal year, taking into account the household spending data which is among figures used to calculate gross domestic product (GDP).
The BOJ issues its long-term economic and price projections in a semi-annual outlook report in April and October of each year, and reviews them in January and July. They are all conducted on the day of its policy-setting meetings.
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