Bank of Japan Gov. Toshihiko Fukui said Friday it is too early for the central bank to reverse its ultraeasy monetary policy, despite its forecast that closely watched consumer prices will edge up slightly in fiscal 2005.

The BOJ said in its semiannual Outlook for Economic Activity and Prices report, released the same day, that a median projection of the country’s core consumer price index by the bank’s policy board members was a 0.1 percent rise in the next fiscal year.

This is the first time the central bank has released its CPI outlook for fiscal 2005.

The BOJ’s report attracted attention among analysts searching for clues as to the bank’s stance on monetary policy. The BOJ has pledged to keep its ultraeasy monetary policy intact until consumer prices start to rise steadily.

“The forecast of a 0.1 percent rise (in the CPI) does not fulfill the conditions to change our policy,” Fukui said.

“The end of deflation is coming closer, but it is not yet clear when it will come.”

The CPIs released by the government earlier in the day showed price volatility, analysts said.

“We can’t expect the index to start to get on an upward trend in the foreseeable future,” said Takahide Kiuchi, senior economist at Nomura Securities Co.

The BOJ’s report states that the economy will probably continue to recover and gradually shift into a pattern of sustainable growth. In fiscal 2005, the bank expects the nation to post moderate growth unless oil prices surge, which would have an adverse effect on the economy.

Also on Friday, the BOJ’s policy-setting panel decided against changing its ultraeasy monetary stance.

The nine-member Policy Board decided unanimously to maintain the target for the outstanding balance of bank deposits held at the BOJ to a range between 30 trillion yen and 35 trillion yen.

Overall Tokyo CPI up

Tokyo’s overall consumer price index rose 0.3 percent in October from a year earlier, the first rise in more than five years, as vegetable prices surged in the aftermath of a string of typhoons, the government said Friday.

But excluding perishable food prices, the core Tokyo CPI dropped 0.3 percent for a record 61st straight month of decline, the Internal Affairs and Communications Ministry said in a preliminary report.

The core CPI for Tokyo’s 23 wards stood at 97.5 against a base of 100 for 2000, extending a decline that started in October 1999.

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