The Bank of Japan (BOJ) left its monetary policy stance unchanged and while it raised its growth forecasts and lowered its inflation forecast it added that risks to both economic activity and prices were skewed to the downside.
Japan's central bank, which in September 2016 shifted the focus of its policy of quantitative easing toward "yield curve control," said the upward momentum in inflation inflation expectations was not sufficiently firm and "thus developments in prices continue to warrant careful attention."
The BOJ underscored that it would continue with its policy of quantitative and qualitative easing to reach its price stability target of 2.0 percent and will continue to expand the monetary base until inflation exceeds the 2 percent target "and stays above the target in a stable manner."
The BOJ again used the adjective of "moderately" to describe Japan's economic expansion, adding that overseas economies were continuing to grow at a moderate pace while business investment was improving across a wide range of industries.
In an update to its forecast, the BOJ raised its growth forecast for fiscal 2017, which began April 1, to an average of 1.8 percent from 1.6 percent forecast in April while inflation was now seen averaging 1.1 percent, down from 1.4 percent.
For fiscal 2018, growth was seen averaging 1.4 percent, higher than 1.3 percent previously forecast, while inflation was seen at 1.5 percent, lower than 1.7 percent forecast in April.
For fiscal 2019, growth is forecast and an unchanged 0.7 percent and inflation at 2.3 percent, down from 2.4 percent for headline CPI. Excluding the impact of the expected increase in consumption taxes, inflation is seen at 1.8 percent, down from 1.9 percent.
www.CentralBankNews.info
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