The Bank of Japan on Friday put off additional monetary easing while providing optimistic predictions in its Outlook for Economic Activity and Prices report by boosting inflation forecasts.

The outlook, released every six months, predicts that the BOJ and government’s goal of achieving 2 percent inflation will be within reach by fiscal 2015, with a predicted 1.9 percent rise in the consumer price index.

Some recent indicators “suggest a rise in medium to long-term inflation expectations,” the report says, adding that the trend will continue and gradually help raise prices.

“It is highly likely” that the inflation target will be met, BOJ Gov. Haruhiko Kuroda said at a news conference after the bank released its inflation forecast.

“Signs that inflation expectations are rising can be seen,” Kuroda assured reporters.

The CPI will rise by 0.7 percent in fiscal 2013, the report predicts, while the previous forecast in January was for a 0.4 percent gain, the report says. Excluding the effects of the upcoming consumption tax hikes, fiscal 2014 will see a 1.4 percent rise in prices, compared with the January forecast of 0.9 percent, according to the report.

Although some analysts have questioned whether the 2 percent target is reachable after decades of deflation, Kuroda reiterated that the forecast is not overly optimistic and that it is based on factors that determine future inflation rates.

The report says Japan’s GDP will expand 2.9 percent in fiscal 2013 and 1.4 percent in fiscal 2014. The BOJ predicted that GDP will rise 1.6 percent in fiscal 2015.

Kuroda took the market by surprise when he launched an aggressive quantitative easing regime earlier this month, including a pledge to buy more than ¥7 trillion in bonds per month, including longer-term debt.

He also said the BOJ will suspend its “bank note principle,” which caps the amount of long-term bonds in its possession to less than the outstanding balance of bank notes in circulation.

The aggressive moves have weakened the yen, lowering it to 99 against the dollar for the first time in nearly four years, while also helping the Nikkei 225 stock average go on a bull run.

On Friday, the BOJ Policy Board unanimously agreed to maintain the new approach and conduct monetary base operations so it will increase “at an annual pace of about ¥60 trillion to ¥70 trillion.”

Kuroda meanwhile refused to comment on the yen’s depreciation and whether the strength of the currency has reached an appropriate level.

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