TOKYO: Japan’s central bank on Tuesday again pushed back the timeline for hitting its inflation goal, the latest policy change that has raised questions about the viability of Tokyo’s attempts to kick start the deflation-plagued economy.
The Bank of Japan has for the past three years embarked on a programme of bond-buying stimulus in a bid to keep interest rates ultra-low and ramp up borrowing to power spending.
The scheme was introduced by BoJ governor Haruhiko Kuroda in conjunction with a government spending drive that Prime Minister Shinzo Abe hoped would drag the economy out of years of torpor.
But in a fresh sign that authorities are still struggling, the bank said it now expects to hit two percent inflation by March 2019 — four years later than its original target and the latest in a string of delays.
It also leaves the next move to Kuroda’s successor as it is 11 months after his term ends.
Abe handpicked Kuroda, former head of the Asian Development Bank, to help drive his ‘Abenomics’ growth blitz of big spending, easy money and structural reforms, unveiled in early 2013, aimed at.
The programme sharply weakened the yen — fattening corporate profits — and set off a stock market rally that spurred hopes for a once-soaring economy caught in a spiral of falling prices and lacklustre growth.
But more than three years on, growth remains fragile while inflation is far below the BoJ’s target. Data last week showed consumer prices fell in September for a seventh straight month.
“What we’re seeing now is nowhere near what the bank had said would happen,” said Tsuyoshi Ueno, senior economist at NLI Research Institute in Tokyo.
“Their initial projection was not very good.”
