Bank of Japan pushes back inflation timeline by one year in latest sign of fragile recovery

A pedestrian walks past the Bank of Japan building in Tokyo.
A pedestrian walks past the Bank of Japan building in Tokyo.PHOTO: REUTERS

TOKYO (AFP) - Japan's central bank on Tuesday (Nov 1) 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 per cent 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.

The bank did not alter monetary policy on Tuesday, including its massive asset-purchase programme worth around 80 trillion yen (S$1.06 trillion) annually.

It also left unchanged a negative interest rate policy - designed to spur lending and economic growth.

The BoJ'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 programme sharply weakened the yen - fattening corporate profits - and set off a stock market rally that spurred hopes the laggard economy was being reignited.

But more than three years on, Japan is still posting wobbly growth and inflation is nowhere near the BoJ's target.

Underscoring the weakness, government data last week showed consumer prices fell in September for the seventh straight month.

On Monday, separate figures showed Japan's factory output and retail sales were flat in September.

The disappointing figures suggest a tepid expansion in July-September economic growth, due later this month.

Japan's economy contracted in the last three months of 2015, before bouncing back in January-March with a 0.5 per cent rise on-quarter and then a 0.2 per cent expansion in April-June.