The Bank of Japan announced today that it left its monetary policy unchanged. After concluding up a two-day policy meeting which began on Monday, the BoJ refrained from expanding its stimulus program under which it pumps 80 trillion yen into the financial system annually.
The central bank’s policymakers maintained their view that Japan’s economy has “continued its moderate recovery trend.”
Speaking at press conference in Tokyo following the policy announcement, BoJ Governor Haruhiko Kuroda said the following:
“There’s absolutely no change to our stance of aiming to achieve our 2% inflation target at the earliest date possible with a timeframe of roughly two years.”
Mr Kuroda however did acknowledge that inflation in Japan could turn negative this year. He said he can’t rule out a dip below zero in the near future due to declining energy prices.
A temporary drop in CPI would not affect the broader trend in upward prices, the Governor commented. The BoJ still aims to hit the 2% inflation target as soon as possible as it remains confident price growth will begin rising again later in the year without additional stimulus.
The central bank first mentioned about reaching the 2% target CPI rate back in April 2013 and gave a two year window to reach it.
Japanese shares rallied to a fifteen-year high after the news that stimulus was kept steady. The dollar traded at 121.25 yen by 10am GMT.