TOKYO: Japan’s central bank on Tuesday pushed back its timeline for reaching a high-profile inflation target, in the latest acknowledgement that Tokyo’s war on deflation is falling way below expectations. After a policy meeting, the Bank of Japan said it now expected prices to move “toward” 2.0 percent by March 2019, the latest in a series of delays. The new timeline is four years beyond an original April 2015 target pledged by BoJ governor Haruhiko Kuroda, whose term ends in April 2018. Policymakers trimmed their consumer price forecast for the current fiscal year to March 2017 and the subsequent two years.
“Risks to both economic activity and prices are skewed to the downside,” the bank said in a post-meeting statement. “On the price front, the momentum toward achieving the price stability target of 2.0 percent seems to be maintained, but is somewhat weaker than the previous outlook, and thus developments in prices warrant careful attention going forward.”
The bank did not alter monetary policy Tuesday, including its massive asset-purchase program worth around 80 trillion yen ($763 billion) annually. It also left unchanged a negative interest rate policy designed to spur lending and growth in the world’s number three economy. “However, policymakers are showing concern about the sharp moderation in price pressures, and we still expect further stimulus in coming months,” Marcel Thieliant from research house Capital Economics said in a commentary after the BoJ decision.
The bank’s inflation goal is a cornerstone of Prime Minister Shinzo Abe’s growth blitz, dubbed Abenomics, which was unveiled to much fanfare in early 2013. The program sharply weakened the yen — fattening corporate profits — and set off a stock market rally that spurred hopes for the laggard economy. But more than three years on, Japan is still posting wobbly growth and inflation is nowhere near the BoJ’s target.
