Japan’s central bank cut its inflation forecast and kept its unprecedented monetary easing unchanged as tumbling oil prices handicap efforts to reflate the world’s third-biggest economy.
The Bank of Japan will increase the monetary base at an annual pace of 80 trillion yen ($674 billion), it said in a statement in Tokyo today, as forecast by all 33 economists surveyed by Bloomberg News. The BOJ lowered its inflation projection to 1 percent for the fiscal year starting in April.
The risk of consumer prices falling briefly this year as oil slumps highlights the challenge that Governor Haruhiko Kuroda faces in reaching his 2 percent price goal after almost two years of record easing. He maintains that over the longer term the economy will benefit from the lower energy bill, with the central bank today raising its growth estimate to 2.1 percent for next fiscal year.
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