KPF Yogya – The Bank of Japan kept its policy unchanged as Governor Haruhiko Kuroda tries to head off a drop in consumer prices two years after he began unprecedented stimulus in the world’s third-biggest economy.

The central bank maintained a plan to expand the monetary base at an annual pace of 80 trillion yen ($666 billion), as forecast by all 34 economists in a Bloomberg News survey.

Kuroda’s bid to spur 2 percent inflation is facing a test, with the BOJ’s main gauge sinking to zero because of cheaper oil and the weakness in Japan’s recovery from recession. While most economists forecast another boost in stimulus by October, policy makers are confident for now that a virtuous cycle of rising profits, wages and expectations for price gains will lift inflation to their goal.

The BOJ’s effort to reflate the economy is running into a number of challenges, from steeper-than-forecast declines in retail sales and industrial production to signs that companies aren’t convinced Japan’s economic prospects are looking up.

Twenty-two of 34 economists forecast the BOJ will expand stimulus by the end of October, according to a Bloomberg survey conducted from March 31 to April 3.
Source : Bloomberg

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