* Policy seen on hold; decision expected 0330-0530GMT
* BOJ to revise up FY2013, FY2014 CPI forecasts
* BOJ to project 2 pct CPI growth in FY2015 - sources
* Many analysts doubt target can be reached in two years
* Governor Kuroda to brief press 0630GMT
By Leika Kihara
TOKYO, April 26 The Bank of Japan will probably
project on Friday that it will meet its 2 percent inflation
target in two years due to its massive stimulus plan, a forecast
analysts say may be too optimistic and which could put its
credibility on the line.
In a reminder of how ambitious the target is, data due out
on Friday is expected to show that core consumer prices, which
exclude volatile food but include oil costs, fell 0.4 percent in
March from a year earlier.
The central bank, charged with overturning years of dogged
deflation, is likely to hold off on offering any fresh policy
initiatives after new Governor Haruhiko Kuroda stunned markets
on April 4 by promising to inject about $1.4 trillion into the
economy to hit the inflation target in roughly two years.
Instead, the focus will be on the BOJ's economic forecasts
to be released in its twice-yearly outlook report and how they
compare with private-sector economists, many of whom argue that
achieving 2 percent inflation in two years is unrealistic.
Kuroda has vowed to do what ever it takes to achieve the
price target in two years, putting the central bank's reputation
on the line to restore an inflation level that has rarely been
hit since the early 1990s.
"The BOJ's easing is clearly working because it made a
strong commitment," Prime Minister Shinzo Abe told parliament on
Thursday, praising the central bank's latest action.
The BOJ is set to maintain a pledge to expand base money,
its new policy target, at an annual pace of 60 trillion yen
($604 billion) to 70 trillion yen. Base money is the combined
amount of cash and deposits parked with the central bank.
The BOJ is likely to forecast that core consumer prices will
rise about 1.5 percent in the fiscal year to March 2015, sources
have said. That is above its current forecast for a 0.9 percent
increase. It excludes the impact of an expected sales tax
increase in 2014.
It is also likely to add an extra year to projections to
show that by the fiscal year ending March 2016, the core
consumer price index will be rising at a pace of 2 percent over
a year earlier, meeting the BOJ's inflation target, the sources
But such forecasts, based on the median expectations of the
BOJ's nine board members including Kuroda, will be much higher
than private-sector projections.
A poll this week of 10 analysts showed most of them expect
core CPI to rise around 0.5 percent in the year to March 2015, a
third of the pace that the BOJ is expected to project. They
forecast core inflation of around 1 percent in fiscal 2015/16,
half the pace expected in the BOJ's numbers.
That poses a dilemma for the BOJ because its policy relies
so much on shaping market and public expectations, or trying to
nudge people into spending more on the belief that prices will
finally start to rise in the future.
A lack of progress in meeting the target may undermine
public expectations of future price moves and force the BOJ into
taking further monetary action despite unleashing the world's
most intense burst of monetary stimulus earlier this month, some