Bank of Japan slashes yearly inflation forecast
THE Bank of Japan yesterday slashed its annual inflation forecast and once again delayed its timetable for hitting a 2 percent target as the economy struggles to gain traction despite years of stimulus.
Central bankers also decided to maintain the BoJ’s ultra-loose monetary policy at a time when their counterparts in other major economies from the Americas to Europe consider ending the era of cheap cash.
The bank said that it now expects the core consumer price index to rise 1.1 percent in the year to March, down from its April estimate of 1.4 percent, while its March 2019 prediction was cut to 1.5 percent from 1.7 percent.
In a statement after the policy meeting the bank also said it now expects to achieve the 2 percent objective sometime in the year to March 2020.
Officials had originally set in 2013 a two-year timeline when unveiling the bank’s massive monetary easing programme as part of Prime Minister Shinzo Abe’s push to kickstart growth in the world’s numberthree economy.
“The BoJ has already pushed out the timeline several times. Now four years have passed, and there is no sign the inflation rate is rising,” Masaaki Kanno, chief economist at Sony Financial Holdings in Tokyo and a former BoJ official, told Bloomberg TV.
However, the bank did lift its economic growth outlook to 1.8 percent for the current fiscal year from its previous estimate of 1.6 percent. It also hiked its fiscal 2018 outlook by 0.1 percentage point to 1.4 percent.
Tokyo’s years-long effort to kickstart growth – a blend of massive monetary easing, government spending and red-tape slashing – stoked a stock market rally, weakened the yen and fattened corporate profits. But growth in the wider economy remains fragile.
While Japan’s job market is tight, individual spending – which accounts for more than a half of the country’s gross domestic product – has remained in the deep freeze.
Bank Governor Haruhiko Kuroda called the further delay in hitting the target “unfortunate” at a news conference after the meeting, saying other central banks have also missed their intended marks.
The bank will continue to do what is necessary but sees no need at present to add more stimulus, he said, stressing: “The momentum toward achieving the 2 percent goal remains intact.”