Bank of Japan pushes back inflation timeline yet again

TOKYO • Japan's central bank yesterday 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 (BOJ) said it now expected prices to move towards 2 per cent by March 2019, the latest in a series of delays.

The new timeline is four years beyond the original April 2015 target pledged by BOJ governor Haruhiko Kuroda, whose term will end in April 2018.

Policymakers trimmed their consumer price forecasts for the current fiscal year to March 2017 and for the subsequent two years.

The bank yesterday did not alter its monetary policy, 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 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 programme sharply weakened the yen - fattening corporate profits - and set off a stock market rally that spurred hopes that the laggard economy was being reignited.

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

Underscoring the weakness, government data last week showed that 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 data, due later this month.

Japan's economy contracted in the last three months of last year 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.


A version of this article appeared in the print edition of The Straits Times on November 02, 2016, with the headline 'Bank of Japan pushes back inflation timeline yet again'. Print Edition | Subscribe