Bank of Japan keeps policy steady

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

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