Bank of Japan tweaks monetary policy with inflation target distant
The first policy change in nearly two years came as the central bank expects a prolonged fight to achieve its 2 per cent inflation target
Japan’s central bank revised down inflation forecasts on Tuesday, making only minor tweaks to a monetary policy that has so far fallen short of lifting prices and boosting the world’s third-largest economy.
There was widespread speculation in the run-up to the Bank of Japan’s two-day meeting that it would adjust its ultra-loose policy, seeking to offset the effects of negative interest rates and its massive bond and asset buying.
But the bank offered only marginal adjustments, introducing some flexibility, and revised down further its inflation forecasts through fiscal 2020.
The BOJ has struggled for years to reach the 2.0 per cent inflation rate thought necessary to turbocharge Japan’s economy, and has defended its decision to maintain its monetary easing even as other central banks tighten policy.
At a press conference, BOJ Governor Haruhiko Kuroda acknowledged that the inflation goal would not be met in the next few years, but declined to give a new timeline.
“Like other central banks, we do not indicate detailed schedules,” he said.