- Haruhiko Kuroda, BoJ Governor
The Bank of Japan lowered its growth and inflation forecasts, as a slew of soft data highlighted weakness in the world's third largest economy. Japan's gross domestic product will rise 2.0% in the year to March 2016, while the inflation rate is seen at 0.8%, the BoJ said in its semi-annual report. That compares with a previous estimate of 2.1% and 1.0%, respectively. The BoJ report, which followed the central bank's policy meeting where officials refrained from adding fresh stimulus, appeared to push back a timeline for reaching a 2.0% inflation goal to the first half of fiscal 2016, which starts from April till September next year. With the timing of hitting the target being postponed, BoJ Governor Haruhiko Kuroda risks losing credibility.
Three board members said the new timeframe was still too optimistic, suggesting that policy makers did not share a univocal view on the timing when cost of living in Japan will reach the targeted level. Kuroda admitted that some board members cited weak consumer spending as one of the drivers for sluggish price growth. Economists also had long been sceptical that the central bank would meet its goal within its original timeframe, and the collapse of global oil prices last year along with lacklustre economic growth had put it even further out of reach. Analysts expect core consumer inflation to hit 0.3% this fiscal year and 1.3% the following year, half the pace projected by the BoJ.
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