The Bank of Japan refrained from expanding monetary stimulus as board members forecast that the pace of inflation will quicken in each of the next two financial years to reach a 2 percent goal.
Governor Haruhiko Kuroda’s board stuck with a plan for an annual increase in the monetary base of between 60 trillion yen and 70 trillion yen ($683 billion). Consumer prices will rise 2.1 percent in the fiscal year starting April 2016, up from 1.9 percent in the previous 12 months and 1.3 percent in the current year, according to median forecasts of the BOJ board, released in Tokyo today.
Analysts may be less optimistic about the price outlook, with most forecasting that additional monetary easing will be needed in coming months. The central bank is monitoring the economy’s performance after a sales-tax increase on April 1 that’s projected to trigger a one-quarter contraction on weakness in consumption.
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