Bank of Japan keeps pol­icy steady

> De­lays in­fla­tion tar­get again, main­tains view that econ­omy will ex­pand mod­er­ately

The Sun (Malaysia) - - SUNBIZ -

TOKYO: The Bank of Japan (BoJ) held off on ex­pand­ing stim­u­lus yes­ter­day de­spite once again push­ing back the tim­ing for hit­ting its in­fla­tion tar­get, sig­nalling that it will keep pol­icy un­changed un­less a se­vere shock threat­ens to de­rail a

fragile eco­nomic re­cov­ery. The BoJ main­tained its view that the world’s third-largest econ­omy will ex­pand mod­er­ately as ex­ports and con­sump­tion emerge from the dol­drums. But it also warned that risks to the out­look were skewed to the down­side and that price mo­men­tum was weak­en­ing, an un­usu­ally bleak as­sess­ment that un­der­scored its wan­ing con­vic­tion of achiev­ing the elu­sive in­fla­tion tar­get. “It’s true it’s tak­ing a sig­nif­i­cant amount of time to erad­i­cate the de­fla­tion­ary mind­set that be­set the econ­omy dur­ing 15 years of de­fla­tion,” gov­er­nor Haruhiko Kuroda (pix) told re­porters. In a quar­terly re­view of its fore­casts re­leased along­side its pol­icy de­ci­sion, the BoJ pushed back the tim­ing for hit­ting 2% in­fla­tion by as much as a year to “around fis­cal 2018” – ad­mit­ting that the tar­get will not be achieved be­fore Kuroda’s ten­ure ends in April 2018.

In July, the BoJ had said in­fla­tion will hit 2% by around March 2018.

Kuroda said the cen­tral bank stands ready to de­ploy “all avail­able means” to hit his in­fla­tion tar­get, seek­ing to keep alive mar­ket ex­pec­ta­tions of ad­di­tional stim­u­lus.

But he added that fis­cal and mon­e­tary mea­sures can re­in­force each other, sig­nalling that gov­ern­ment steps to spur growth needed to ac­com­pany the BoJ’s ef­forts to erad­i­cate de­fla­tion.

“For the econ­omy to achieve sus­tain­able, ap­pro­pri­ate growth, we need fis­cal and struc­tural poli­cies as well as mon­e­tary pol­icy,” Kuroda told a news con­fer­ence.

The cen­tral bank also cut its in­fla­tion fore­casts for fis­cal 2017 and 2018, blam­ing weak over­seas de­mand and wan­ing pub­lic con­vic­tion that prices and eco­nomic ac­tiv­ity will pick up. – Reuters

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