Japan’s central bank revised its inflation forecast on Tuesday and adjusted its view of price risks, while leaving its monetary easing policy in place in a nod to lingering pandemic uncertainty.

As prices rise swiftly in other economies, Japan’s inflation remains relatively feeble, and still far below the long-held two percent target seen as necessary to turbo-charge the world’s third largest economy.

In a quarterly report on prices and the economy, the central bank said it now forecasts inflation of 1.1 percent for the fiscal year to March 2023, up from its previous forecast of 0.9 percent.

It also revised up its forecast for the fiscal year to March 2024 to 1.1 percent from 1.0 percent, leaving the projection for the current year unchanged.

“The projected rate of increase in the CPI (consumer price index) for fiscal 2022 is somewhat higher, mainly reflecting a rise in commodity prices and the pass-through of that rise to consumer prices,” the central bank said.

It declared “risks to prices are generally balanced,” adjusting its previous assessment of risk as “skewed to the downside.”

The BoJ revised down its growth forecast for the current fiscal year to 2.8 percent from the previous 3.4 percent.

But it now sees faster-than-expected 3.8 percent growth in the fiscal year to March 2023, with a slight downward revision of 1.1 percent growth in the year to March 2024.

“Risks to economic activity are skewed to the downside for the time being, mainly due to the impact of Covid-19,” it added.

The central bank maintained its longstanding target of two-percent inflation, which remains far off despite years of efforts and prices surging globally.

Even with the latest upward revision in prices, “a change in (the BoJ’s) policy stance is hard to imagine” as the inflation target “is still far away,” said economist Masamichi Adachi of UBS in a note ahead of the Tuesday decision.

“With no Board member expecting inflation to come close to the two percent target for the foreseeable future, talk of policy tightening is premature,” added Marcel Thieliant, senior Japan economist at Capital Economics.

“We are even more pessimistic than the Bank about the medium-term outlook for inflation,” he added in a note.

“We’re sticking to our view that the Bank will keep interest rates low for the foreseeable future.”

kh/sah/rbu