TOKYO – The Bank of Japan will consider easing monetary policy again this month as it eyes doubling its inflation target, sources say, as weakness in the economy threatens to delay the country in getting out of deflation.
Any easing will likely take the form of another increase in the BOJ's 101 trillion yen ($1 trillion) asset buying and lending program, sources familiar with its thinking said.
"The trend for prices is weak and that's a concern. The outlook for overseas economies is also highly uncertain," said one of the sources, who spoke on condition of anonymity due to the sensitivity of the matter.
Under pressure from new Prime Minister Shinzo Abe, the BOJ will likely adopt a new 2 percent inflation target, double its current price goal, at its policy-setting meeting on January 21-22, the sources say.
By accompanying the new target with more stimulus, the BOJ hopes to show its determination to get the country out of deflation and fend off calls for more radical steps from politicians such as a revision to the BOJ Law guaranteeing its independence in guiding monetary policy.
($1 = 87.7300 Japanese yen)
(Reporting by Leika Kihara, Sumio Ito and Yoshifumi Takemoto; Editing by Hugh Lawson)