BOJ stands pat on policy as inflation goal remains far-flung

Source: Xinhua | 2018-09-20

The Bank of Japan (BOJ) opted to maintain its ultra-easy monetary policy on Wednesday while monitoring the effectiveness of its recent policy adjustment amid weak inflation.

The central bank's two-day policy meeting concluded Wednesday with the bank voting to maintain its purchases of government bonds to push the 10-year yield close to zero.

It also decided to keep its minus 0.1 percent short-term rate for some funds parked there by financial institutions.

"The current powerful monetary easing measures are still necessary to achieve our 2 percent price stability target, BOJ Governor Haruhiko Kuroda told a press conference Wednesday.

The central bank decided at a previous board meeting in July to allow long-term interest rates to move in a wider range to increase policy flexibility.

Kuroda said that its still early to judge whether the policy adjustment was a success and the BOJ would keep monitoring the effects of the policy adjustment.

Japanese Prime Minister Shinzo Abe suggested in a policy debate last week that Japan's ultra-easy monetary policy should not continue too long.

Kuroda, for his part, stressed that any exit strategy was contingent on achieving the 2 percent inflation target.

"We have to first reach 2 percent and create a condition for the exit," he said.

The BOJ has been pursuing the 2 percent inflation target since Kuroda took office in 2013 in a bid to lift Japan out of years of deflationary stagnation.

But after more than five years of aggressive monetary easing, the target remains far-flung, leading the bank to push back the time frame for achieving the goal several times and to drop the time frame from its quarterly economic outlook report earlier this year.