Japan's[1] central bank maintained its ultra-loose monetary policy on Friday and downgraded its view on inflation, signalling that it will lag well behind its U.S. and European peers in rolling back crisis-era stimulus.
Markets are on the lookout for clues from BOJ Governor Haruhiko Kuroda's post-meeting briefing on how long the central bank could hold off on whittling down stimulus given recent disappointingly weak price growth.
As widely expected, the Bank of Japan[2] kept its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.
The move contrasts with the European Central Bank's decision to end its asset-purchase program this year and the U.S. Federal Reserve's steady rate increases, which signaled a break from policies deployed to battle the 2007-2009 financial crisis.
"Consumer price growth is in a range of 0.5 to 1 percent," the BOJ said in a statement accompanying the decision. That was a slightly bleaker view than in the previous meeting in April, when the central bank said inflation was moving around 1 percent.
The BOJ stuck to its view the economy was expanding moderately, unfazed by a first-quarter contraction that many analysts blame on temporary factors like bad weather.
But it also maintained its cautious assessment on prospects for hitting its elusive 2 percent inflation target, saying that inflation expectations were moving sideways.
The delay in pulling out of crisis-era stimulus would leave the BOJ with a lack of ammunition to fight another economic downturn, even as its U.S. and European peers start restocking their tool-kit.
Japan's economy shrank an annualized 0.6 percent in the first quarter, though many analysts expect growth to bounce...