TOKYO- Japan’s central bank maintained its massive stimulus on Tuesday and projected inflation missing its 2 percent target for years to come, as fresh curbs to combat a spike in COVID-19 cases overshadow the boost to growth from solid global demand.
Japan last week declared a third, two-week state of emergency for Tokyo, Osaka and two other prefectures to contain the pandemic, clouding prospects for a fragile economic recovery.
In a quarterly report released after its two-day meeting on Tuesday, the Bank of Japan stuck to its view the world’s third-largest economy is headed for a moderate recovery as robust US and Chinese demand underpins exports.
But the bank cut this year’s price forecast and predicted for the first time that inflation will stay well short of its 2 percent target beyond Governor Haruhiko Kuroda’s term, which ends in early 2023.
As widely expected, the BOJ maintained its short-term interest rate target at -0.1 percent and that for 10-year bond yields around 0 percent.
“Japan’s economy is likely to recover, though the level of activity will be lower than before the spread of the pandemic mainly for sectors that offer face-to-face services,” the BOJ said in the report.
“We will take additional monetary easing steps without hesitation as needed with a close eye on the impact of the pandemic,” it said.
