The Bank of Japan changed its view on inflation risks for the first time since 2014, pushing the yen lower as the country that has battled deflation for decades faces pressure from higher food and energy prices.

Despite the historic change in views, the Bank of Japan did not change its monetary stance on Tuesday, opting to maintain negative interest rates, Asset purchase The yield curve control policy remains unchanged.

The Bank of Japan raised its inflation forecast for the fiscal year starting in April to 1.1 percent from 0.9 percent. The Bank of Japan said Japan’s economic recovery had become “obvious” and changed its price risk assessment to “generally balanced” from the term “biased to the downside” it has used since October 2014.

Although the Bank of Japan’s move was widely expected, speculation Ahead of this week’s meeting, the central bank may be under pressure to respond more aggressively to rising prices.Japan’s rise in prices, while notable in a country already accustomed to flat or falling prices, remains lower than elsewhere Worldwide, especially in the US and Europe.

Within an hour of the Bank of Japan’s announcement, yen falls Against the dollar, it fell back below 115 yen and into a range near five-year lows.

The Bank of Japan kept its short-term rate target of minus 0.1 percent unchanged and pledged to steer long-term rates near zero as inflation remains below its 2 percent target, even as other large central banks have shifted to Tighten ultra-loose policies.

“We are even more pessimistic than central banks about the medium-term outlook for inflation,” Marcel Thieliant, senior Japan economist at Capital Economics, said in a note. “Tightening policy in this scenario would completely mock the 2% inflation target, and we stand by our view that banks will keep rates low for the foreseeable future.”

Since the last outlook report was prepared in October, import costs have been driven by high energy prices and yen weakens.

Year-on-year growth in wholesale prices in Japan remained at a high 8% to 9% in November and December, reflecting soaring input costs. Companies that sell everything from food to household items have started to pass those costs on to consumers.

Consumer spending has risen since Japan lifted a state of emergency in cities including Tokyo in October, but coronavirus Infections have also surged With the spread of Omicron variants.

The government will once again place prefectures, including the capital, under a state of quasi-emergency, which could have knock-on effects on consumer behavior.