BOJ trims inflation forecast, signals prolonged easing as COVID pain persists (updated)

Relo

27/04/2021 04:29

* BOJ keeps yield targets unchanged as widely expected
    * BOJ cuts inflation forecast for current fiscal year
    * Board predicts inflation missing target beyond Kuroda's
term
    * Governor Kuroda to brief media 0630 GMT

 (Recasts with policy decision, new forecasts)
    By Leika Kihara and Daniel Leussink
    TOKYO, April 27 (Reuters) - Japan's central bank maintained
its massive stimulus on Tuesday and projected inflation missing
its 2% target for years to come, as fresh curbs to combat a
spike in COVID-19 cases overshadow the boost to growth from
solid global demand.
    Japan last week declared a third, two-week state of
emergency for Tokyo, Osaka and two other prefectures to contain
the pandemic, clouding prospects for a fragile economic
recovery.  urn:newsml:reuters.com:*:nL4N2MF4QX
    In a quarterly report released after its two-day meeting on
Tuesday, the Bank of Japan stuck to its view the world's
third-largest economy is headed for a moderate recovery as
robust U.S. and Chinese demand underpins exports.
    But the bank cut this year's price forecast and predicted
for the first time that inflation will stay well short of its 2%
target beyond Governor Haruhiko Kuroda's term, which ends in
early 2023.  urn:newsml:reuters.com:*:nL4N2MC45S
    As widely expected, the BOJ maintained its short-term
interest rate target at -0.1% and that for 10-year bond yields
around 0%.
    "Japan's economy is likely to recover, though the level of
activity will be lower than before the spread of the pandemic
mainly for sectors that offer face-to-face services," the BOJ
said in the report.
    "We will take additional monetary easing steps without
hesitation as needed with a close eye on the impact of the
pandemic," it said.
    Markets are focusing on Kuroda's post-meeting briefing for
his views on how the new state of emergency curbs could affect
Japan's economy and the price outlook.
    The BOJ said it now expects core consumer inflation to hit
0.1% in the fiscal year beginning in April, down from a forecast
of 0.5% made in January.
    It projects inflation to accelerate to 0.8% the following
year and 1.0% in fiscal 2023, the report showed.
    The BOJ conducted a review of its policy tools in March to
make them sustainable enough to weather an expected prolonged
battle to fire up inflation. Japan's core consumer prices fell
for the eighth straight month in March.  urn:newsml:reuters.com:*:nL1N2LH025 urn:newsml:reuters.com:*:nL4N2MF0LB

 (Reporting by Leika Kihara, Daniel Leussink and Tetsushi
Kajimoto; Editing by Sam Holmes)
 ((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))