Bank of Japan drops inflation timeframe

The Bank of Japan on Friday removed reference to a timeframe for achieving its longstanding inflation target, as it struggles to hit the elusive goal despite steady economic growth.

The central bank had promised to achieve the 2.0 per cent figure around the fiscal year to March 2020, after pushing back deadlines six times since governor Haruhiko Kuroda took office in 2013.

But mention of the deadline was dropped from the first outlook report since Kuroda kicked off his second term earlier this month.

He is due to speak later Friday, potentially providing clarity on why the timeframe was dropped.

The BoJ also said it was holding steady on monetary policy, continuing to purchase 10-year government bonds so that long-term interest rates would remain “at around zero per cent”.

“Although the year-on-year rate of increase in the CPI has been accelerating gradually, it has continued to show relatively weak developments compared to the economic expansion and the labour market tightening,” the BoJ said in the report.

Kuroda took the helm in March 2013 with a licence to deploy what was called a monetary “bazooka” to revive the moribund economy.

He has overseen a policy of ultra-aggressive monetary easing, adopting in January 2016 the BoJ’s first-ever negative interest rates—effectively charging lenders to park their cash at the central bank.

However, Kuroda has failed in his mission to hit the inflation target of two per cent, while signalling he has no plans to drop the policy, despite moves in that direction in other major economies.

Japan said last week its consumer prices edged up 0.9 per cent in March, but inflation was slightly weaker than the previous month and still far below a longstanding target.