The Bank of Japan adjusted its view of inflation risks for the first time since 2014 but only nudged up its price forecasts a fraction, a combination that suggests moves toward phasing out stimulus are still a distant prospect.

The central bank kept its negative interest rate, bond yield target and asset purchases unchanged at the end of its meeting Tuesday. The stand-pat decision was widely expected given that Japan’s gradually accelerating inflation still remains far weaker than in the U.S. and other major economies.

The bank said the risks to prices are balanced instead of tilted downward, in a change that shows the bank now sees the possibility of inflation outstripping their projections, not just undershooting them.

While the latest assessment suggests the economy is not entirely immune to the price forces prompting the Federal Reserve and the Bank of England to pull back from their pandemic stimulus settings, the BOJ projected that inflation will still only be 1.1% in the year ending March 2024.

The cautious forecast will likely cool any speculation that the BOJ might start gearing up to normalize policy during Governor Haruhiko Kuroda’s last full year at the helm.

"Consumer inflation is likely to stay around 1% through the end of the BOJ's projection period. As such, there is no need to modify the BOJ's monetary easing," Kuroda said at a news conference after the day's meeting.

"Japan has recently seen inflationary pressure heighten. This is driven partly by an improving output gap, reflecting a pickup in Japan's economy. When you look at Japan's past experience, such as in 2018, price gains driven by rising commodity costs had been temporary," Kuroda said.

"Kuroda has essentially pushed back emerging speculation over possible policy adjustments this year,” said Masamichi Adachi, chief Japan economist at UBS Securities and a former BOJ official. "Instead, the policy gap with the Fed will widen even further as the BOJ stays right where it is now.”

Instead of a surge in prices across the board, inflation in Japan remains limited to items such as fuel and cooking essentials as companies continue to absorb the fastest costs increases in decades rather than risk losing business with higher price tags.

But higher prices for energy and some daily necessities could still pique voters seeing their pocket books squeezed ahead of national elections in summer. That could trigger possible political pressure from Prime Minister Fumio Kishida’s administration to tweak policy.

The divergence from the Fed and other major central banks has also made the yen the world’s worst performing major currency in the past 12 months, as investors move money into higher yielding assets.

The currency’s slide is a boon to Japan’s exporters, but it drives up energy costs for businesses and households.

While consumer price data remains soft, there is some evidence that the key gauge is overstating the weakness.

The data show core prices edging up just 0.5% in November, but the measure would have reached the BOJ’s 2% target were it not for the impact of phone fees that have been cut sharply under government pressure.

The phone-effect will start to fade out from April and the resulting higher price data could fuel angst among Japanese households whose inflation expectations are already running at the highest level since 2008, largely as a result of costlier gasoline.

Still, most private sector analysts see inflation cooling later in 2022 as energy prices stabilize and with wage gains likely staying subdued.

Stagnant pay, a longstanding problem for the country’s workers, is one reason a majority of economists still don’t see major action from the bank this year or next.

"The BOJ will stick to its current policy framework at least until Kuroda’s term ends” in April next year, said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.

"Minor adjustments have made the framework sustainable, and I think the hurdle is very high for interest rate changes. That’s going to be the job for Kuroda’s successor,” he added.