September 15, 2015, 20:00 JST

BoJ no longer bound by time limits

The Bank of Japan kept its policy unchanged when it finished its two days policy meeting on September 15. In the press conference after the meeting, Governor Kuroda kept his optimistic tone on the economy. In his view, Japan remains on a growth path despite some adverse overseas conditions and the inflationary trend in Japan is continuing to rise. He continues to expect the CPI inflation in Japan to reach 2% by September 2016, but he also said the timing could depend on the energy prices. 

Listening to Governor Kuroda's Q&A, we have an impression that the BoJ is no longer bound by the timing of the attainment of its inflation target. Back in 2013 when Kurodanomics started, the bank aimed to achieve its 2% inflation target in 2 years. Having failed to achieve it, it seems that the bank is scrapping the time limits part of their inflation target altogether. If that is the case, a mere delay in the expected timing of the attainment of its inflation target is unlikely to prompt the BoJ to take an easing action. That will probably mean no additional easing for the rest of the year, and possibly neither in 2016. The BoJ does not need to ease so long as the inflation in Japan appears to be edging toward 2%.