- Junko Nishioka, an economist at Sumitomo Mitsui Banking Corp.
The Bank of Japan kept its monetary policy settings and its sanguine view on economic prospects unchanged , reiterating that the world's third largest economy is recovering steadily. In line with expectations, by an 8-1 vote the central bank decided to maintain a pledge to expand the monetary base at an annual pace of 80 trillion yen. The BoJ board member Takahide Kiuchi proposed the central bank to reduce its asset purchases to 45 trillion yen a year. In an accompanying statement, the BOJ said consumer inflation, excluding the sales tax increase that came into effect in April last year, currently hovering at 0%, will remain around that level for a while on the back of a plunge in oil prices. Given the excessively low inflation, there is mounting speculation that the BoJ will soon expand its qualitative and quantitative easing programme from the current 80 trillion yen per year, possibly as soon as the end of April when the BoJ board next meets. The BOJ has stood pat on policy since expanding stimulus in October last year to prevent plunging oil prices, and a subsequent decline in inflation, from delaying a sustained end to deflation.
Kuroda, who originally sought to achieve the 2% inflation goal in about two years when he kicked off record easing in April 2013, now says the target will be reached sometime around the year through March 2016, depending on developments on the oil market.
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