TOKYO: The head of the Bank of Japan yesterday said its monetary easing blitz was winning the war on deflation as policymakers held off announcing any fresh measures to stimulate the economy.
The decision after a two-day policy meeting was widely expected with analysts predicting the BoJ would launch an expansion of its asset-buying plan later this year to counter the effects of an April sales tax hike.
While the increase is seen as crucial to chopping Japan’s eye-watering national debt — proportionately the worst among rich nations — there are fears it will derail its economic recovery.
The BoJ said the world’s third-largest economy “continued to recover moderately”, while it also stuck with a 2.0 percent inflation target seen as crucial to the bank’s policy blueprint.
BoJ governor Haruhiko Kuroda unveiled the vast asset-buying scheme in April as part of a broader plan by Prime Minister Shinzo Abe to reinvigorate the economy and eradicate years of deflation with a policy blitz, dubbed Abenomics. Both men are attending the Davos summit where the world’s political and business elite are gathering this week.
Kuroda said yesterday that the bank would press on with its policy plan, and added that he was still confident the inflation target would be reached sometime next year — despite growing scepticism among analysts and even some BoJ board members.
However, London-based Capital Economics said it expected the BoJ to ultimately push back its inflation target by about one year, as it unleashes further stimulus to counter any slowdown.