The Bank of Japan may raise its inflation forecast while keeping short-term interest rates unchanged.

According to three sources familiar with the thoughts of the Central Bank of Japan, the Central Bank will consider raising its inflation forecast for the current fiscal year this month, reflecting the ongoing pump in rice and broader food prices. However, the sources said that the Central Bank of Japan is expected to largely maintain its inflation expectations for the fiscal years 2026 and 2027, meaning that the Central Bank will pause interest rate hikes and wait for clearer information on how U.S. tariffs will affect the economy.

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