TOKYO — The Bank of Japan on Thursday decided to downgrade its inflation outlook for the current financial year, while maintaining monetary easing steps to prop up the world’s third-largest economy.
The central bank predicts Japan’s consumer price index will rise 1.1 percent this year, down from the 1.4 percent increase estimated three months ago, according to a statement issued after a two-day monetary policy meeting.
The bank launched an aggressive monetary easing campaign in April 2013 to reach 2 percent inflation within two years, as Prime Minister Shinzo Abe vowed to pull the country out of years of deflation.
The government, however, has failed to escape deflation and achieve long-term economic growth, with wages stagnant and consumer spending sluggish.
The bank decided on Thursday to once again delay the timing for achieving the inflation target. It now expects to reach the goal around fiscal year 2019 though it predicted that it would do so around fiscal year 2018.
Meanwhile, the bank expects the economy to grow 1.8 percent in the year through March, revised up from April estimates of 1.6 percent growth, it said.
“Japan’s economy is expanding moderately, with a virtuous cycle from income to spending operating,” the bank said.
“Overseas economies have continued to grow at a moderate pace on the whole. In this situation, exports have been on an increasing trend,” it said.
Earlier Thursday, the government also reported Japan’s exports had jumped 9.7 percent from a year earlier to 6.6 trillion yen (US$59.1 billion) in June for the seventh straight month of increase.