The Bank of Japan (BOJ) on Friday opted to keep its monetary policy steady but abandoned a time frame it had set for hitting an inflation target in a move purportedly not to rattle markets about stimulus expectations if a hard deadline was maintained.
Following a two-day policy board meeting, the central bank opted to maintain its ultra-easy monetary policy as its lofty 2 percent inflation goal remains some way off, despite the economy experiencing a relatively steady uptick.
The board also decided to maintain its yield curve control rate of minus 0.1 percent and government bond purchases aimed at guiding the 10-year yield to around zero percent.
The BOJ also decided to keep its purchases of exchange-traded funds (ETFs) and other risky assets as part of its market support.
BOJ Governor Haruhiko Kuroda told a press conference after the two-day meeting ending Friday that the 2 percent inflation target by 2019 is still achievable, but that the reference was pulled from its quarterly economic outlook because financial markets were taking the date to mean a hard deadline.
Kuroda said the date was meant to work as a forecast as opposed to a clear cutoff point.
"The time frame was always a forecast, not a binding deadline for meeting our goal. But some market players interpreted the time frame as a deadline and tied it with monetary policy action," Kuroda said.
The central bank chief said Japan is still struggling with deflationary pressure and in terms of the price outlook there are too many variables to give a hard deadline.
"In reality, it's taking time to achieve 2 percent inflation and there are various uncertainties to the price outlook. It's inappropriate for markets to focus too much on the time frame," said Kuroda.
He added that if the economy were to lose momentum for hitting the 2 percent inflation target, then the BOJ would consider further easing policy.
"We removed the time frame to arrest market misunderstanding that the time frame is directly linked to monetary policy," he said.
In terms of the outlook for inflation, Kuroda took a cautious stance, noting that inflation remains weak despite the economy's growth.
"Companies' wage and price-setting behavior remains cautious. When stripping away the effect of energy price moves, inflation remains on a weak note despite the economy's expansion and the narrowing output gap," he said.
However, he maintained that despite such uncertainties, the BOJ still felt that reaching its lofty 2 percent inflation target during 2019 was achievable.
"There's no change to our view, formed three months ago, that inflation will likely reach 2 percent during fiscal 2019," Kuroda said, adding that "there's no change to our commitment to achieve 2 percent inflation at the earliest date possible."
Following a two-day policy board meeting, the central bank opted to maintain its ultra-easy monetary policy as its lofty 2 percent inflation goal remains some way off, despite the economy experiencing a relatively steady uptick.
The board also decided to maintain its yield curve control rate of minus 0.1 percent and government bond purchases aimed at guiding the 10-year yield to around zero percent.
The BOJ also decided to keep its purchases of exchange-traded funds (ETFs) and other risky assets as part of its market support.
BOJ Governor Haruhiko Kuroda told a press conference after the two-day meeting ending Friday that the 2 percent inflation target by 2019 is still achievable, but that the reference was pulled from its quarterly economic outlook because financial markets were taking the date to mean a hard deadline.
Kuroda said the date was meant to work as a forecast as opposed to a clear cutoff point.
"The time frame was always a forecast, not a binding deadline for meeting our goal. But some market players interpreted the time frame as a deadline and tied it with monetary policy action," Kuroda said.
The central bank chief said Japan is still struggling with deflationary pressure and in terms of the price outlook there are too many variables to give a hard deadline.
"In reality, it's taking time to achieve 2 percent inflation and there are various uncertainties to the price outlook. It's inappropriate for markets to focus too much on the time frame," said Kuroda.
He added that if the economy were to lose momentum for hitting the 2 percent inflation target, then the BOJ would consider further easing policy.
"We removed the time frame to arrest market misunderstanding that the time frame is directly linked to monetary policy," he said.
In terms of the outlook for inflation, Kuroda took a cautious stance, noting that inflation remains weak despite the economy's growth.
"Companies' wage and price-setting behavior remains cautious. When stripping away the effect of energy price moves, inflation remains on a weak note despite the economy's expansion and the narrowing output gap," he said.
However, he maintained that despite such uncertainties, the BOJ still felt that reaching its lofty 2 percent inflation target during 2019 was achievable.
"There's no change to our view, formed three months ago, that inflation will likely reach 2 percent during fiscal 2019," Kuroda said, adding that "there's no change to our commitment to achieve 2 percent inflation at the earliest date possible."
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