The Bank of Japan on Thursday revised down its inflation outlook for this fiscal year through next March, saying it now expects consumer prices to rise 0.8 percent from the previous year due to lower crude oil prices, prompting it push back the timeline for reaching a 2 percent inflation goal.
The central bank now says Japan's inflation rate will hit that target around the first half of fiscal 2016. Its earlier projection said there would be 2 percent inflation by fiscal 2015.
The new outlook compares to the nine-member policy board's median forecast in January of a 1.0 percent rise in the core consumer price index, excluding the impact of last April's consumption tax hike.
The BOJ also cut its inflation projection for fiscal 2016, saying the CPI is now expected to rise 2.0 percent against the earlier forecast 2.2 percent.
In its semiannual report on the economic and price outlook released after a one-day policy meeting, the BOJ said Japan's gross domestic product shrank 0.9 percent in the just-ended fiscal 2014, a bigger decline than the earlier projected 0.5 percent fall.
As for the domestic economy, the BOJ said it is recovering moderately, backed by a pickup in exports and production as well as an improvement in employment and income conditions.
Earlier in the day, the central bank's nine-member policy board decided to maintain its current monetary easing measures, keeping its key policy of increasing base money at an annual pace of about ¥80 trillion through massive asset purchases.
Takahide Kiuchi, the only member who opposed the decision, proposed to decelerate the pace to around ¥45 trillion annually, but his proposal was rejected by a majority vote.
Last month, the government said Japan's core CPI remained flat in February from a year earlier excluding the impact of the sales tax hike, with the effects of declines in crude oil prices dampening inflation.