Japan's 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 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...