"Of course, there could be both upside and downside risks to the BOJ's price forecast but such risks have not materialized, and if that's the case, the current policy will continue"
- Haruhiko Kuroda, BoJ Governor
Markets were little changed after the BoJ monetary policy statement that showed the central bank refrained from boosting its unprecedented stimulus programme further, saying the economy is on the way to reach a 2% inflation target as planned. A statement, which was based on the two-day policy meeting, also showed the world's third largest economy recovering at a moderate pace, while consumption climbed higher ahead of the planned sales tax in April. Moreover, the BoJ mentioned business fixed investment inched higher amid improved corporate profits, while public investment is on the uptrend as well. Stronger labour market and income situation were also mentioned in the statement.
Despite economic strengthening and higher inflation, Haruhiko Kuroda expressed his concerns that consumer prices may stall around 1.25% for some time. The shift in assessment comes amid fears that Japanese economy will be thrown off the course selected by policymakers by a consumption tax hike, the first for 17 years.
A couple of months earlier, analysts were making their bets the BoJ will introduce more stimulus in April, however, accelerating inflation prompted economists from HSBC Holdings Plc. to Daiwa Securities Co. to push back their estimates. Currently, only 33% of experts believe, there will be a fresh stimulus announcement from the BoJ, down from 56% just three months ago.
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