Bank of Japan to review, but maintain, easing measures

But the review announcement comes as analysts say the stimulus measures that were supposed to deliver a vital boost to the Japanese economy are looking increasingly unsustainable.

The yen's value has weakened against the dollar as the central bank bucks the global trend of aggressive rate hikes to battle soaring inflation.

Still, at a press conference earlier this month, Ueda called the BoJ's current stance "appropriate", signalling there would be no surprises in Friday's decision.

He has also warned of the risk of sudden moves given global economic uncertainty and fears for the banking sector after the shock failure of three mid-sized US lenders.

- Inflation forecast -
The central bank on Friday hiked its inflation forecasts for the current and next financial years, now predicting 1.8 percent in 2023-24, and two percent in 2024-25.

Data showed last week that Japan's consumer prices, excluding volatile fresh food prices, rose 3.1 percent year on year in March as inflation slowed from four-decade highs.

That figure is above the BoJ's long-standing inflation target of two percent, which has been surpassed every month since April 2022.

Kuroda had argued that this was driven by temporary distortions -- such as higher energy prices linked to the war in Ukraine -- and as such, was no reason to move away from monetary easing measures.

Takahide Kiuchi, executive economist of Nomura Research Institute, said in a note last week that the demand-driven two-percent inflation the bank wants is hard to attain.

"Governor Ueda must be thinking that achieving the two percent inflation goal in a sustainable way would be difficult," Kiuchi said.

Instead, the target could first be made more "flexible", for example by setting it as a mid- to long-term goal, before reviewing current monetary easing tools, he suggested.