• Kyodo, Bloomberg

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The Bank of Japan on Thursday pushed back the timing for achieving its 2 percent inflation target by another year, to around fiscal 2019, underscoring its struggle to spur price gains despite its prolonged radical monetary easing program.

Following a two-day policy meeting, the central bank left its monetary policy unchanged, including asset purchases and a negative interest rate on some funds that financial institutions keep parked at the central bank.

In a quarterly report released after the meeting, the BOJ said it expects inflation to reach 1.1 percent in fiscal 2017 through next March, down from the April forecast of 1.4 percent. It also predicts prices will rise 1.5 percent in fiscal 2018, down from the earlier 1.7 percent.

Upon introducing drastic easing measures in April 2013, the BOJ had said it expected to achieve the inflation target in around two years. With the latest revision, it has now pushed the timing back six times.

The latest delay is a sign of the continued difficulty the BOJ faces in creating a “virtuous” cycle where strong corporate earnings lead to higher wages, spurring household spending and giving businesses the confidence to raise prices.

It also underscores the BOJ’s slow progress toward its price goal at a time when other major central banks are turning toward normalizing their monetary policy after years of stimulus. The European Central Bank, which was said to be examining options for winding down quantitative easing, was expected to conclude its own governing council meeting later Thursday.

“The BOJ has already pushed out the timeline several times. Now four years have passed, and there is no sign the inflation rate is rising,” said Masaaki Kanno, chief economist at Sony Financial Holdings Inc. in Tokyo and a former BOJ official. He warned that the central bank risks drying up the market for Japanese government bonds before reaching its price goal.

BOJ Gov. Haruhiko Kuroda has acknowledged the stickiness of Japan’s “deflationary mindset,” as entities from convenience stores to restaurants cut business hours instead of securing the workers they need by raising pay.

“It’s increasingly likely that Kuroda won’t see inflation come close to the goal” by the time his term ends in April next year, said Hiroshi Watanabe, an economist at Sony Financial Holdings Inc. “Japanese companies don’t have enough confidence in raising prices after decades of stagnation.”

The BOJ faces growing questions about the sustainability of its easing program, and pressure to explain when, and under what conditions, it might begin an exit. The BOJ’s asset buying — mainly of JGBs — has swelled its balance sheet to nearly the same size as Japan’s economy. Some BOJ officials are increasingly concerned about the sustainability of its purchases of exchange-traded funds, according to people familiar with the matter.

On Thursday, the central bank upgraded the forecast for Japan’s economic growth amid upbeat data, saying it expects real gross domestic product in fiscal 2017 to expand 1.8 percent compared with the April forecast of 1.6 percent. The growth outlook for fiscal 2018 was also raised to 1.4 percent from 1.3 percent.

Inflation has slowly been rising but still remains near zero percent. The nationwide core consumer price index, which excludes fresh foods because of their volatility but not energy, rose just 0.4 percent in May from a year earlier.

Government data shows the economy expanded for the fifth straight quarter in the January-March quarter, the longest stretch of growth in more than a decade albeit at a moderate pace, amid robust exports and a modest pickup in household spending.

Job availability in the country is at a four-decade high and unemployment remains low, though income growth has not followed as expected.

Thursday’s meeting marks the last for board members Takehiro Sato and Takahide Kiuchi, two former private-sector economists who were strong critics of Kuroda’s reflationary policies, because their terms end on Sunday.

Replacing them are Hitoshi Suzuki, a banker at Japan’s biggest lender, Bank of Tokyo-Mitsubishi UFJ, and Goshi Kataoka, an economist at think tank Mitsubishi Research and Consulting Co.

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