Bank of Japan Maintains Record Stimulus as Inflation Challenges Kuroda

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The Bank of Japan maintained its record monetary stimulus as Governor Haruhiko Kuroda seeks to spur inflation and announced plans to improve transparency.

The central bank will continue to expand the monetary base at an annual pace of 80 trillion yen ($650 billion), it said in a statement on Friday, as forecast by all 35 economists surveyed by Bloomberg. The BOJ will increase the frequency of its economic outlook reports and release assessments of each board member, starting next year. It will cut the number of policy meetings to eight a year, in line with the U.S. Federal Reserve.

Sluggish export growth is the latest risk to a recovery in the economy that analysts see slowing this quarter as companies work off elevated inventories. While Kuroda said this week that inflation remains on track for the BOJ’s target and he appeared to back off on earlier remarks that put the brakes on a weaker yen, economists are looking for more clarity at his press conference today.

“It’s not time for the BOJ to add stimulus,” said Masayuki Kichikawa, an economist at Bank of America Corp. “Data on consumer spending have been mixed and exports aren’t that strong, but overall the BOJ can maintain its view for a recovery.”

Inflation is likely to reach the BOJ’s goal around the six months through September 2016, Kuroda said this week, citing rising wages and a tight labor market. He also sought to clarify last week’s remarks on the yen, which had sent the currency soaring and led economists from Barclays Plc to UBS Group AG to push back their forecasts for added easing.

The yen declined 0.1 percent to 123.04 per dollar at 1:29 p.m. in Tokyo, after touching a 13-year low earlier this month.

Increases Transparency

The central bank will release its outlook report on the economy and inflation on a quarterly basis, instead of twice yearly. The outlook reports will include the forecasts and risk assessments of each board member, the BOJ said.

The BOJ will cut the number of policy board meetings to eight per year, from 14. Four will cover the outlook reports and four will update developments in the economy and prices.

It will release a summary of opinions presented at each meeting a week after the event.

Economic growth is forecast to slow to 1.4 percent this quarter after a 3.9 percent annualized expansion in the first three months of the year, when companies increased investment and piled up inventory. Inflation by the BOJ’s main measure slowed to zero in April, two years after Kuroda introduced an unprecedented asset-purchase plan to spur 2 percent price gains.

Investment Rising

Stronger-than-originally estimated capital spending in the first quarter is likely to be encouraging for Kuroda, who has urged companies to put more of their cash and record profits into new facilities, according to Taro Saito, an economist at NLI Research Institute.

While the tumble in oil prices has pushed down inflation, there are signs of inflationary pressures. Base pay rose 0.4 percent in April, a second straight increase.

Prices of 321 goods rose in April, compared with 177 in March 2013 before Kuroda began the record stimulus.

(An earlier version of this story was corrected to show that inflation stalled in April.)

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