At the conclusion of a monetary policy meeting on Wednesday, the Bank of Japan downgraded inflation and economic growth forecasts through fiscal 2020, putting its 2 percent inflation target well out of reach for the foreseeable future.

In the short term, the central bank also predicted that inflation for the current fiscal year would only rise by 0.9 percent, a downward revision of 0.2 points from its July forecast.

But with little room left for further easing after years of monetary stimulus, the board voted 7 to 2 to keep monetary policy unchanged.

Speaking at a news conference, BOJ Gov. Haruhiko Kuroda denied that the revisions represented a large shift in the bank’s outlook, but said that “latent” global risks could take a bite out of domestic growth and price inflation.

“From last year, medium- to long-term expected inflation has remained flat … (but) because there is upward pressure we think there will be a gradual rise in prices,” Kuroda said.

However, the governor added that this price momentum could be derailed by various risks growing in the global economy.

“We are paying attention to the downside risks that affect the world economy and trade,” said Kuroda, listing the U.S. normalization of interest rates, geopolitical risks in Europe and fears over financial stability in developing markets as specific risks that could potentially damage Japan’s economy.

He also raised concerns about a prolonged trade dispute between the U.S. and China.

“Until now the effects of the U.S. and Chinese trade dispute has remained limited,” Kuroda said.

“(But) at the Bank of Japan, we are aware of the risks posed by protectionist trade policies to our economic outlook.”

Kuroda added that trade disputes could land on Japan’s shores as domestic businesses may cut back investment in an uncertain business environment.

The Outlook for Economic Activity and Prices released Wednesday also showed the bank may be growing weary of risks in the domestic economy after over five years of easy monetary policy.

“Although (risks to the financial system are) judged as not significant at this point … it is necessary to pay close attention to future developments,” the statement read.

Marcel Thieliant, a senior Japan economist with Capital Economics, said that the domestic risks alone may further prevent the BOJ from moving toward a stimulus exit anytime soon.

“The looming sales tax hike and the downgrade to the BOJ’s inflation forecasts underline that policy tightening remains a long way off,” wrote Thieliant in a research note.

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