The Bank of Japan on Friday said inflation is likely to take more time to reach its 2 percent target and the economy is set to shift to a growth path thereafter.
In its semi-annual outlook report, the central bank said inflation excluding fresh food prices is projected to be around 2 percent target in the second half of fiscal 2016. Earlier, the bank forecast inflation to be around target by the middle of next year.
The bank lowered the core inflation projection for fiscal 2016 to 1.4 percent from 1.9 percent.
“Thereafter, Japan’s economy is expected to gradually shift to a growth path that sustains such inflation in a stable manner”, the bank said.
The timing of reaching the inflation target is dependent on developments in crude oil prices, the BoJ said. Core inflation is projected to be about zero percent for the time being, the bank added.
The BoJ lowered its underlying inflation outlook for this year to 0.1 percent from 0.7 percent.
Japan’s central bank also cut its growth forecast for this fiscal year to 1.2 percent from 1.7 percent. The outlook for next fiscal was slightly reduced to 1.4 percent from 1.5 percent.
For 2017, the inflation outlook was left unchanged at 3.1 percent, while the growth projection was raised slightly to 0.3 percent from 0.2 percent.
The material has been provided by InstaForex Company – www.instaforex.com