The Bank of Japan is considering raising its inflation outlook for the current business year to next March to near 3 percent from 2.5 percent at present, sources close to the matter said Tuesday.

The upward revision is meant to reflect price hikes that have been broadening further than expected and rising crude oil prices, the sources said, with the yen's depreciation also boosting import prices.

The BOJ is scheduled to release a fresh economic and price outlook report at the end of a two-day policy meeting through Oct. 31.

During the upcoming policy-setting meeting, the Policy Board will examine the inflation outlook and the necessity of persisting with ultralow rates.

The index for retail prices remained at a high level for both major manufacturers and nonmanufacturers in the latest Tankan business survey released in early October, as firms have been raising prices to pass on higher costs.

The Japanese central bank loosened its grip on long-term rates in July, allowing 10-year Japanese government bond yields to rise toward 1.0 percent.

The tweak was partly meant to brace for upside risks to inflation, enabling bond yields to better reflect economic fundamentals.

Governor Kazuo Ueda said at the time that the decision was also made to address volatility in foreign exchange markets. But he has stressed the need to retain monetary easing, ruling out a near-term rate hike.

Under the current estimates, core consumer prices, excluding volatile fresh food items, will undershoot the BOJ's 2 percent target in fiscal 2024 and 2025.

BOJ policymakers are expected to examine the impact of the fiscal 2023 upward revision on the next two years, the sources said.

The bank has maintained that the inflation goal will not be achieved without sustainable wage growth.

Still, core CPI has remained above 2 percent for more than a year, due largely to surging import costs that have been inflated by a weaker yen.

The key gauge of inflation rose 3.1 percent in August from a year ago and analysts expect it to increase by somewhere between 2.5 percent and 3 percent for fiscal 2023.

The BOJ has made a series of upward revisions to its fiscal 2023 inflation outlook. Core CPI was initially projected to rise 1.6 percent as of January but was raised to 1.8 percent in April and then to 2.5 percent in July.

The BOJ is expected to consider an upward revision to the economic growth outlook for fiscal 2023, from the current 1.3 percent expansion in gross domestic product, the sources said.

Japan's economy grew at an annualized real rate of 4.8 percent in April-June.

Related coverage:

Japan quiet on possible yen-buying market intervention

Japan big maker sentiment up, services highest since 1991: Tankan

Japan mulls support for low-income earners in new economic package