POST TIME: 23 January, 2019 11:03:44 PM
Bank of Japan lowers inflation forecasts again
AFP, Tokyo

Bank of Japan lowers inflation forecasts again

Japan’s central bank again revised down its inflation forecasts yesterday, in the latest sign of its struggle to reach a long-sought two per cent rate that officials consider key to boost the economy.

After a two-day meeting the policy board left its mammoth monetary easing programme in place, as expected, and lowered the inflation forecast for the fiscal year ending March next year to 0.9 per cent from 1.4 percent.

It said the decision to revise down the forecast was “due primarily to the decline in crude oil prices.”

The revision in its quarterly report follows a previous downgrade in late October.

The BoJ in 2013 embarked on a huge bond-buying programme in a bid to stimulate long-dormant prices with the stated aim of hitting two per cent inflation within two years.

But while the plan — which ran in tandem with Prime Minister Shinzo Abe’s big-spending drive to ramp up the economy — showed early promise, the bank has been forced to delay several times the date for hitting its target.

It has in the past blamed a “deflation mindset” caused by consumers and employers used to long periods of low growth and deflation.

While it said Japan’s economy will likely continue to expand, it added that “the mindset and behaviour based on the assumption that wages and prices will not increase easily have been deeply entrenched”.

Officials have pointed to other factors including cautious wage and price growth from firms, and increased technological progress that has reduced costs and intensified competition.