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1st LD Writethru: Japan leaves monetary policy unchanged

Xinhua, November 1, 2016 Adjust font size:

Japanese central bank on Tuesday decided to maintain its current monetary policies, while further prolonging the timeframe for achieving its inflation goal of 2 percent.

"As for the conduct of monetary policy, the Bank will continue with 'Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,' aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner," said a quarterly outlook report released by Bank of Japan (BOJ) on Tuesday.

"Inflation expectations have remained in a weakening phase," it said.

The BOJ decided at its two-day policy meeting through Tuesday that the schedule of achieving its inflation target of 2 percent will be extended to sometime in or after fiscal 2018 (April 1, 2018 - March 31, 2019) from sometime in fiscal 2017, which means the Governor of BOJ Haruhiko Kuroda could not attain the inflation goal during his term through April 2018.

Local media called it "a major setback" to Prime Minister Shinzo Abe's "Abenomics" policy mix designed to beat prolonged deflation.

As the domestic consumer price recovery lacks strength due to weak crude oil prices on the international market, the Japanese central bank revised down the year-on-year rate of change in the core consumer price index (CPI) of fiscal 2016 from 0.1 percent projected in July to minus 0.1 percent.

Meanwhile, the BOJ expected the core CPI, which excludes fresh food prices, would grow 1.5 percent and 1.7 percent in fiscal 2017 and 2018, respectively, down from the 1.7 percent and 1.9 percent forecasted in July.

Japan's core CPI in September declined 0.5 percent from a year earlier, marking the seventh straight month of declines.

In addition, the central bank maintained its forecasts for the country's real GDP made in July, which is expected to grow 1 percent, 1.3 percent and 0.9 percent in fiscal 2016, 2017 and 2018, respectively.

"The Bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target," it said. Endit