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Business

Bank of Japan scraps inflation target

Japan's central bank has had to admit that its goal of pulling the nation out of its deflationary spiral is not achievable during the term of the lender's current governor. The announcement is a blow to Abenomics.

Ending a two-day policy meeting in Tokyo, the Bank of Japan said Tuesday it had abandoned achieving a 2-percent inflation target during the term of its current governor, Haruhiko Kuroda.

The move dealt a blow to Prime Minister Shinzo Abe, who vowed to pull the world's third-largest economy out of the deflationary spiral when he took office in December 2012.

Abe had hand-picked Kuroda, a former head of the Asian Development Bank, to help drive his "Abenomics" growth blitz of big spending, easy money and structural reforms.

But the central bank pushed back its timeframe for attaining its inflation goal to some time after the 2018 fiscal year ending March 2019, with Kuroda's term over in April 2018.

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The Bank of Japan said it expected the consumer price index to fall by 0.1 percent for the current financial year through March 2017, down from the 0.1-percent rise predicted three months ago.

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Consumer prices dropped by 0.5 percent year-on-year in September, marking the seventh straight month of decline amid falling global energy prices and sluggish consumer spending.

The central bank decided Tuesday to keep up its aggressive monetary easing approach in its outlook. At the beginning of the year, the lender made a surprise decision to introduce negative interest rates, which some feared would hurt banks' profits.

hg/jd (dpa, AFP)

 

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